william c dudley : opening remarks at the transatlantic economy – convergence or divergence conference remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the transatlantic economy : convergence or divergence conference, federal reserve bank of new york, new york city, 18 april 2016. * * * it is my pleasure to welcome you to today ’ s conference. over the past decade, the new york fed has been working together with the european commission and the centre for economic policy research in sponsoring a number of conferences on interdependencies and policy challenges on both sides of the atlantic ocean. today, as in the past, we have a great program with many distinguished speakers from academia, and the private and public sectors. in particular, i would highlight the keynote speech following lunch by pierre moscovici, european commissioner for economic and financial affairs, taxation and customs. as the two largest economies in the world, the united states and the european union have a shared stake in the vitality of the global economy. without growth in both our regions, the global economy will not prosper and we will not be able to provide the conditions to enable our citizens to fulfill their aspirations. both the united states and europe suffered large social and economic costs from the financial crisis and the deep recession that followed. we continue to take steps to minimize the risks that we will ever find ourselves in that situation again. in many respects, the united states and europe face similar challenges and have similar goals. today i want to focus on some of the challenges. on the regulatory side, there is considerable good news. in particular, substantial progress has been made in strengthening the global banking system. capital and liquidity standards for internationally active banks have been raised significantly. this should reduce the risk of failure for these banks. also, the financial system is being made more resilient and robust. for example, the global set of principles for financial market infrastructures has been updated and strengthened. moreover, some steps have been taken to better deal with the failure of systemically important financial firms on a cross - border basis. key attributes for resolution regimes have been promulgated by the financial stability board. efforts are underway to improve how we can work together in a coordinated way on a global basis. but more needs to be done. the impediments to an orderly cross - border resolution still need to be fully identified and dismantled. this is necessary to solve the so - called “ too

to just under 13 percent, an increase of almost 45 percent relative to precrisis levels, and the quality of capital has improved. bank holding company balance sheets are also significantly more liquid, with liquid assets increasing from 26 percent of total assets at end - 2006 to 38 percent at end - 2014. core deposits now fund 44 percent of total assets, a 10 percentage point increase from pre - crisis levels. a stronger u. s. banking system better protects against future shocks, provides a more solid foundation for growth, and therefore also enhances prospects for growth and financial stability abroad. “ international capital flows : reliable or fickle? ” world economic outlook, april 2011, chapter 4. bis central bankers ’ speeches basel iii implementation has been proceeding on a comparable basis in advanced and emerging market countries. the financial stability board has been monitoring the unintended effects of reforms on eme banks and emes report no significant adverse effects. 4 however, potential differences in reform implementation across jurisdictions could create challenges, particularly in countries where foreign banks are active. this underscores the importance of continued home and host coordination. i would like to briefly touch on two u. s. - specific financial regulatory issues with international implications, namely enhanced prudential standards for foreign banks, including intermediate holding company requirements for the largest institutions, and issues surrounding correspondent banking, u. s. anti - money laundering rules, and “ de - risking ”. of these, the latter may have the most relevance for the emes broadly. the adoption of enhanced prudential standards for foreign banking organizations ( fbos ) is a key element of u. s. regulatory reforms, and a significant change in supervision of fbos. 5 the largest fbos ( with u. s. non - branch assets greater than $ 50 billion ) must hold their u. s. subsidiaries under an intermediate holding company ( ihc ), and meet various capital, leverage, liquidity, stress testing, risk management and corporate governance requirements. these requirements respond to a mandate in the dodd - frank act for enhanced standards for the largest domestic and foreign banks. the most significant requirements are expected to fall on the largest fbos from advanced economies – some of which have also adopted tighter local requirements for foreign banks – and should contribute importantly to a safer and sounder u. s. and international financial system. correspondent banking relationships have also received heightened attention in the context of serious violations of anti - money laundering and know - your - customer standards by some