##ositories. the goal of all of these efforts is to develop a consistent international approach to the regulation and supervision of derivatives products and market infrastructures, as well as to the sound implementation of the agreed - upon approaches. our aim is to ensure a level playing field that will promote both financial stability and fair competitive conditions by preventing activity from flowing to less regulated jurisdictions. bis central bankers ’ speeches infrastructure issues the dodd - frank act addressed both the infrastructure of the derivatives markets and the regulation and supervision of its dealers and major participants. central counterparties are given an expanded role in the clearing and settling of swap and security - based swap ( hereafter referred to as “ swap ” ) transactions, and the board believes benefits can flow from this reform. since 2005, federal reserve staff members have worked with market participants to strengthen the infrastructure for otc derivatives, including developing and broadening the use of central clearing mechanisms and trade repositories. market participants have already established central counterparties that provide clearing services for some otc interest rate, energy, and credit derivatives contracts. if properly designed, managed, and overseen, central counterparties offer an important tool for managing counterparty credit risk, and thus they can reduce risk to market participants and to the financial system. both central counterparties and trade repositories also support regulatory oversight and policymaking through provision of more comprehensive data on the derivatives markets. the board is committed to continuing to work with other authorities, both in the united states and abroad, to ensure that a largely consistent international approach is taken to central counterparties and trade repositories and that their risk - reducing benefits are realized. title viii of the act complements the role of central clearing in title vii through heightened supervisory oversight of systemically important financial market utilities, including systemically important facilities that clear swaps. this heightened oversight is important because financial market utilities such as central counterparties concentrate risk and thus have the potential to transmit shocks throughout the financial markets. as part of title viii, the board also was given new authority to provide emergency collateralized liquidity in unusual and exigent circumstances to systemically important financial market utilities. we are carefully considering ways to implement this provision in a manner that protects taxpayers and limits any rise in moral hazard. supervisory issues although central counterparties will provide an additional tool for managing counterparty credit risk, enhancements to the risk - management policies and procedures for individual market participants will continue to be a high priority for supervisors. as the reforms

a more protracted period of relatively slow growth ; or, if you are really pessimistic, the adjustments might be more abrupt implying a possible period of negative growth and global financial instability. the recent somewhat erratic recovery of us stock markets from their earlier gloom suggests that they are beginning to side with the optimists ; some of the survey evidence of consumer and business confidence on the other hand still supports a rather more pessimistic view. for what it is worth, and given the strong policy response in the us, i am modestly optimistic, but i recognise the downside risks. the outcome is obviously the major uncertainty surrounding the global economic prospect, and policymakers elsewhere can only monitor, continuously and very closely, the emerging evidence and react to that in the light of its likely impact on their own situation. the us slowdown comes at a particularly bad time for japan which is already suffering from a combination of weak domestic demand – particularly consumer demand – and supply - side constraints reflecting pressures on the banking system, heavily burdened with non - performing loans, and an acknowledged need for restructuring parts of the non - financial sector. japan has pretty well exhausted the scope for macro - economic stimulus. successive fiscal packages focussed on public works, and a sustained period of attempted monetary expansion, at near - zero interest rates in the face of deflation, have failed to overcome a high rate of precautionary saving by an ageing population facing an uncertain economic future. the policy emphasis of the new japanese administration appears to be shifting towards firmer action to bring about supply - side reform in the belief that this will help to engender greater confidence. the danger is that, to the extent that more aggressive restructuring results in bank ruptcies and higher unemployment in the short term, that in itself might tend to weaken consumer demand for a time before the benefits of the restructuring come through. i make no judgement about the prospects in japan. you certainly are better placed to do that than i am! closer to home in this country, the euro area economy is a good deal better placed to withstand the us slowdown, although we are all bound to be affected to some degree. for most of last year the euro area economy performed relatively strongly, with overall output growth well above trend, and unemployment in the area as a whole continuing to fall from its earlier chronically high level. a problem, of course, was the persistent weakness of the euro in foreign exchange markets, despite strong " fundamental