best aid the process of moving to these new instruments without pre - empting private sector creativity and problem solving. federal reserve as regulator i ’ ve focused my comments thus far on the federal reserve ’ s operational role in the payments system. in addition to the reserve banks ’ role as provider of payment services, the federal reserve board also regulates aspects of the payments system. while our role as provider of payment services goes back to the inception of the federal reserve, our authority to regulate the interbank collection or execution of payments not processed by the federal reserve is only about a decade old. in exercising this regulatory authority, the board has focused in large part on improving the competitiveness of the market for interbank check collection. the board ’ s 1994 same - day settlement rule enhanced the ability of correspondent banks to compete with the federal reserve banks in collecting checks. the board adopted this rule because it believed it was in the best interest of the payments system, even though it knew the rule would reduce the reserve banks ’ check volume. our goal was competition in the check collection market, not preserving federal reserve market share. as i mentioned earlier, even with the same - day settlement rule, correspondent banks may still have difficulty competing with federal reserve banks in some check collection markets due to their more limited presentment abilities. several weeks ago, the board issued an advanced notice of proposed rulemaking designed to assess market experience under the sameday settlement rule. the comments we receive will be helpful in assessing whether further reductions in the legal disparities between the federal reserve banks and private - sector banks would further enhance competition and the overall efficiencies that could result from that competition. this analysis is a complex one. i believe that in principle reduction in legal disparities between the federal reserve and private - sector banks will enhance market competition. the benefits of regulatory change, however, have to be balanced with a potential increase in costs to paying banks and their check - writing customers. in other words, we should continue to look for ways to reduce legal disparities between the federal reserve and privatesector banks, but some of these changes may not reduce costs for all participants in the system. the federal reserve ’ s role should also include identifying and reducing regulatory burdens that unreasonably inhibit innovations that improve the efficiency, security, and convenience of payment methods. regulation may reduce uncertainty for some, but it may also discourage investment in new products or technologies by others. this is particularly true if the product is

abs. and let me add that transparency requirements are doubly - effective because it is investors who are tasked to perform the due diligence on abss and verify that lenders comply with risk retention requirements. so we see that the worry about underlying asset quality is likely to be confined to a number of increasingly - verifiable cases. abss in this speech denote both abss and rmbss. bis central bankers ’ speeches the second source of abs risk is at the level of the structure itself. it is true that abss are complex instruments, involving many parties to a transaction and a range of possible constructions. many in this room will be well aware of terms such as re - securitisations, synthetic transactions, and revolving structures. these arrangements indeed add complexity, but i must emphasise that the majority of current eu abss are static pool, true sale structures, especially the sme abss we are interested in. let me also add that senior european sme abss generally have consistently greater credit enhancements than nearly all other senior eu abss, certainly so in relation to the delinquencies in their asset pools. in addition to credit enhancement, i cannot avoid mentioning the role played by the eurosystem collateral eligibility criteria in influencing the abs structures we see today. the criteria impose strict conditions, for example requiring a proper legal true sale, allowing only publicly listed senior bonds with a minimum rating, and collateralised by granular homogeneous asset pools. obtaining eurosystem eligibility, and thus the prospect of access to funding in an emergency, acts as a powerful incentive for abs issuers to structure relatively high - quality deals. given these asset pool and structural safeguards, it is not surprising that there have been very few european abss ’ defaults. depending on the study and starting date, since the start of the 2007 / 08 financial crisis defaults range between 0. 6 – 1. 5 % on average, against 9. 3 – 18. 4 % on average for us securitisations. what is more, european sme abss are far below both broader eu and us securitisation default rates, with defaults occurring on about 0. 1 % of instruments. and, even more convincingly, our internal analysis suggests that abss eligible for eurosystem operations have historically had impairment rates even lower than non - eligible abss. this suggests again that sensible asset and structural safeguards can go a long way to mitiga