##a. htm. randal k. quarles, “ the fsb in 2021 : addressing financial stability challenges in an age of interconnectedness, innovation, and change ” ( speech at the peterson institute for international economics, - 5the resiliency of these investment vehicles, the basic model of a seemingly stable - value fund, backed by assets the value and liquidity of which varies, remained vulnerable. work is ongoing both domestically and at the financial stability board on how to better address these vulnerabilities. areas for further examination also include treasury markets, where last year ’ s selling pressures overwhelmed dealers ’ willingness or ability to intermediate, and which continue to be a focus for the board, the department of the treasury, and other regulators. 11 among other measures, we are reviewing the design and calibration of the supplementary leverage ratio, which was originally gauged for a financial system with far lower levels of cash reserves and a much smaller treasury market. 12 finally, these areas for further review include a rapidly changing set of customer practices ; changing patterns in the use of financial services, by consumers and businesses ; and a changing relationship between banks and their nonbank partners. these trends predate the covid event, but the past year accelerated them dramatically, with important implications for financial stability, safety and soundness, consumer protection, and underserved communities ’ access to safe and fair financial services. the federal reserve is working to understand and address this changing landscape in a number of ways — from the use of artificial intelligence, to the evolving need for operational resiliency, to the growing risk of disruptive shocks from cybersecurity failures. 13 washington, d. c. ( via webcast ), march 30, 2021 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20210330a. htm. randal k. quarles, “ what happened? what have we learned from it? lessons from covid - 19 stress on the financial system ” ( speech at the institute of international finance, washington, d. c. ( via webcast ), october 15, 2020 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20201015a. htm. see note 8, board of governors of the federal reserve system, news release, march 19, 2021. board of governors of the

##g20210325a. htm. - 4such, it gives us a chance to examine that regime ’ s strengths and shortcomings, and to position it well for future challenges. any list of lessons must begin with the strong performance of supervisory stress testing. 9 the stress - testing program not only prepared banks for a period of prolonged hardship ; it also clarified their health and resilience as the covid event progressed. this role was a return to the original purpose of stress testing and a confirmation of its earliest use during the 2008 financial crisis. it also, however, affirmed the ways that stress testing has evolved in recent years, into a more flexible, more transparent anchor for the federal reserve ’ s broader capital program. for example, while it was prudent — given that this was the first real - world test of the post - 2008 system — for us to impose temporary capital distribution restrictions beyond those that form part of that system, we now know that our framework works. we can have particular confidence in the framework when it is supplemented and informed by a real - time stress testing regime. in the future, having learned the lessons of this test, we will be able to rely on the automatic restrictions of our carefully developed framework when the stress test tells us the system will be resilient, rather than impose ad hoc and roughly improvised limitations. other areas, however, are ripe for closer examination, both domestically and internationally. these include the strains in short - term funding markets, and the second destabilizing run on prime money market mutual funds in roughly a decade, which required significant public intervention to address. 10 despite some efforts after the 2008 crisis to enhance randal k. quarles, “ themistocles and the mathematicians : the role of stress testing ” ( speech at the federal reserve bank of atlanta, atlanta, ga ( via webcast ), february 25, 2021 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20210225a. htm ; see also board of governors of the federal reserve system, “ federal reserve board announces results from second round of bank stress tests will be released friday, december 18, at 4 : 30 p. m. est, ” news release, december 4, 2020, https : / / www. federalreserve. gov / newsevents / pressreleases / bcreg20201204