. ’ ” ). 3 richard dzina, advancing the fed ’ s wholesale services in an era of unprecedented challenge and change, remarks at securities industry and financial markets association ’ s operations conference and exhibition 2017, boca raton, florida, may 9, 2017. 4 final report of neal batson, in re enron corp., no. 01 – 16034 ( s. d. n. y. bankr. nov. 4, 2003 ), at 115. 5 association of the bar of the city of new york, “ report of the task force on the lawyer ’ s role in corporate 6 / 7 bis central bankers'speeches governance ” ( 2006 ), 95. 7 / 7 bis central bankers'speeches

credit provided by clearing banks could eliminate the tension between the interests of clearing banks and investors when a dealer becomes troubled. in the case of collateral requirements, collateral haircuts could be required to be independent of ratings. many of these suggestions are already in the process of being implemented. for example, the basel committee is in the process of strengthening bank capital in four ways : 1 ) higher capital requirements ; 2 ) higher quality capital ; 3 ) more complete risk capture ; and 4 ) capital conservation measures, including the use of contingent capital instruments. with greater capital buffers, the risk of liquidity runs should be reduced going forward. it should be noted, however, that use of contingent capital instruments, or any other potential changes to our current capital regime, does not obviate the need for an improved resolution process. second, the basel committee is moving forward with its work in establishing liquidity standards for large, complex financial institutions. these liquidity standards would consist of two parts. first, there would be a liquidity buffer made up of high - quality liquid assets that would be of sufficient size so that the firm could manage a stress event caused by a shortterm loss of investor confidence. second, there would be rules concerning the degree of supervision could also be brought to bear to limit the tendency for firms to reduce their capital and liquidity when provided with a credible liquidity backstop. allowable maturity transformation. long - term illiquid assets would have to be largely funded by equity and longer - term borrowing, not by short - term borrowing, such as tri - party repo. third, the federal reserve is working with a broad range of private sector participants, including dealers, clearing banks, and tri - party repo investors to eliminate the structural instability of the tri - party repo system so that tri - party borrowers are less vulnerable to runs. exactly how the mechanics of the tri - party repo system will be adjusted is still a work in process. 8 fourth, the major u. s. securities dealers are now subject to supervision by the federal reserve under the bank holding company act. this means that their liquidity funding needs are subject to supervisory oversight, including stress tests, to ensure that the firms can meet large funding drains. liquidity risk will never be eliminated, nor should it. the preferences of borrowers to borrow long and of lenders to lend short means that the maturity transformation process generates real benefits. however, we can do better to make our