##tory in nature and not have capital consequences. it is also our intention to work with the occ and the fdic to provide guidance to large banks on how we expect them to identify, measure, monitor, and manage the financial risks of climate change. operational resilience the last priority i will mention is operational resilience. financial institutions face significant challenges from a wide range of disruptive events. these include technologybased failures, cyber incidents, pandemics, and natural disasters. such events, combined with banks'growing reliance on third - party service providers, expose them to a range of operational risks, which are often difficult to anticipate. when they manifest, these risks can affect the safety and soundness of affected banks and pose risks to u. s. financial stability by limiting market functioning or undermining trust in the system. we at the federal reserve will continue to work in this area to help ensure that banks understand and manage these complex and evolving challenges and that consumers remain protected. additionally, we are committed to working closely with other domestic agencies and international authorities to coordinate on supervisory approaches to operational resilience. conclusion as the banking system continues to evolve, we must ensure that supervision and regulation keeps up with those changes and are appropriate for the underlying risks. over the coming months and years, it will be crucial to examine new risks to the banking system and whether and how the real economy, including consumer needs and access to financial services, may change. as vulnerabilities appear, a strong banking system will help households and businesses weather those challenges. as vice chair for supervision, i will continue to work to promote a safe and fair banking system. thank you, and i look forward to your questions. 1 https : / / www. federalreserve. gov / newsevents / pressreleases / bcreg20220909a. htm. 4 / 4 bis - central bankers'speeches

at the other federal bank regulatory agencies in implementing enhanced regulatory capital requirements known as the " basel iii endgame " standards. 1 when considering improvements to the regulatory capital framework, i will be guided by a few key principles : the capital framework should be forward - looking, should be tiered so that the highest standards apply to the riskiest firms, and should support a safer and fairer financial system. we will look at design choices that help to further these goals. resolution in recent years, merger activity and organic growth have increased the size of large banks, which could complicate efforts by regulators to resolve those firms upon failure without disruption to customers and counterparties. the board recently invited comment on an advance notice of proposed rulemaking to enhance regulators'ability to resolve large banks in an orderly way, should they fail. we look forward to the comments we will receive. 2 / 4 bis - central bankers'speeches merger review the federal reserve is also evaluating our approach to reviewing banks'proposed acquisitions. mergers are often a feature of vibrant sectors, but the advantages that firms seek to gain through mergers must be weighed against the risks that mergers can pose to competition, consumers, and financial stability. a merged institution may be able to provide a wider range of products and services at lower prices. but if there is concentration, mergers could also reduce competition and access to financial services through higher prices or a reduced range of services. in addition, mergers of larger, more complex firms may pose risks to financial stability. we are also required to evaluate whether a merger would meet the convenience and needs of the community. the federal reserve - along with the office of the comptroller of the currency ( occ ) and the federal deposit insurance corporation ( fdic ) - is reviewing the issues to see if any adjustments to our approach would be appropriate. crypto activity another priority is monitoring the risk of crypto - asset - related activities. over the last several years, we have seen crypto - asset activity grow rapidly and experience periods of significant stress. some financial innovations offer opportunities, but as we have recently seen, many innovations also carry risks - which can include liquidity runs, the rapid collapse of asset values, misuse of customer funds, fraud, theft, manipulation, and money laundering. these risks, if not well controlled, can harm retail investors and cut against the goals of a safe and fair financial system. most of this activity is occurring outside of the ambit of banking regulation. but recent events remind