inconsistent with the dual mandate goals of full employment and price stability. moreover, countercyclical capital requirements build resilience, unlike monetary policy. the ccyb framework, which was finalized in september 2016, requires the federal reserve board to vote at least once per year on the level of the ccyb. while other jurisdictions have developed some experience with the use of countercyclical buffers, in the united states, the ccyb has so far not yet been activated. the condition set out in september 2016 for raising the ccyb above its minimum value of zero is that financial system vulnerabilities are meaningfully above normal. when the ccyb rule was issued in september 2016, it was calibrated against the backdrop of the established levels of required u. s. structural buffers. thus, it would be prudent to accompany any consideration of material adjustments to the calibration of the structural buffers held by the large banking institutions, with compensating adjustments to the countercyclical buffer in order to achieve the same overall level of resilience through the cycle. completing the agenda while we have made important progress in our regulatory framework, we still have not implemented a few key elements. the list of remaining items is short but important and well anticipated. first, we are close to finalizing the net stable funding ratio, or nsfr. this significant liquidity regulation is important to ensure that large banking firms maintain a stable funding profile over a one - year horizon. it will serve as a natural complement to our existing liquidity coverage ratio, which helps ensure firms can withstand liquidity strains over a 30 - day time horizon. and by most estimates, our large complex banking institutions are in a position to meet the expected requirements with little adjustment. 3 / 5 bis central bankers'speeches second, we need to finalize dodd - frank act limits on large counterparty exposures. these limits will reduce the chances that outsized exposures, particularly between large financial institutions, could spread financial distress and undermine financial stability as we witnessed during the last financial crisis. moreover, these large exposure limits will effectively update the traditional bank lending limits that proved useful for well over 100 years for today ’ s challenges, by recognizing the many ways in which banks and their affiliates take on credit exposure beyond directly extending loans. i support efforts to improve the efficacy of the volcker rule while preserving its underlying goal of prohibiting banking firms from engaging in speculative activities for which

federal deposit insurance and other safeguards were never intended. the interagency regulation implementing the volcker rule is not the most effective way of achieving its very laudable and important goal. we are exploring ways to streamline and simplify the regulation to reduce costs without weakening the key objectives. we should be able to provide firms and supervisors with greater clarity about what constitutes permissible market - making. we should also identify ways to further tailor the volcker compliance regime to focus on firms with large trading operations and reduce the compliance burden for small banking entities with limited trading operations. i also support moving forward with minimum haircuts for securities financing transactions ( sfts ) on a marketwide basis to counter the growth of volatile funding structures outside the banking sector. international agreement on a regulatory framework for minimum sft haircuts was reached by financial regulators in 2015, and it is important to follow through on this work plan. while current market practices in this area may well exhibit much better risk management than pre - crisis, past experience suggests we cannot rely on prudent practices to remain in place as competitive and cyclical pressures build. regulatory minimum haircuts calibrated to be appropriate through the cycle could help ensure that repo, securities lending, and securities margin lending and related markets do not become a source of instability in periods of financial stress through fire sales and run - type behavior. here, i have focused primarily on the reforms that are most important for the resilience of the large interconnected banking organizations at the core of our system. outside of this group, i favor better tailoring the regulatory framework for our smaller banking firms so as to decrease regulatory burden. while we have taken some important steps to reduce burden on smaller banking organizations such as streamlining the call report for small, less complex community banks, increasing appraisal thresholds for cre loans, and reducing the frequency of exams in certain circumstances, there is more we should do. conclusion history and experience show that stable economic growth is aided by strong regulatory buffers that bolster the resilience of our large banking organizations and help reduce the severity of downturns. at a time when cyclical pressures are building, and asset valuations are stretched, we should be calling for large banking organizations to safeguard the capital and liquidity buffers they have built over the past few years. maintaining resilience over the cycle can be accomplished through a combination of structural and countercyclical buffers whose calibrations are inherently