##rs and national banks, entities for which the federal reserve is not the primary supervisor, we will have a somewhat lesser role in the volcker rule implementation process. but as the primary supervisor for state member banks, foreign broker - dealer subsidiaries of u. s. bank holding companies, and state - chartered branches of foreign banking organizations, we will still have a role to play. staff of the federal reserve will continue to engage with staff of the other agencies and work together, to the extent appropriate and practicable, to help ensure consistency in application of the final rule to banking entities within their respective jurisdictions. indeed, shortly after adopting the volcker rule, the five agencies agreed to create an interagency working group in pursuit of this goal, and the group has already begun to meet. bis central bankers ’ speeches it remains to be seen whether other jurisdictions will adopt banking reforms similar to the volcker rule. while reforms dealing with the trading activities of banking firms have been recommended by the vickers commission in the united kingdom and by the liikanen group in the european union, neither of these approaches expressly prohibits a consolidated banking firm from engaging in proprietary trading. rather, these reforms bear closer resemblance to the traditional u. s. banking structure concept of ring - fencing depository institution subsidiaries of bank holding companies. most notably, under both vickers and liikanen, banking firms would be able to continue to engage in proprietary trading, but would simply be required to do it outside of the retail deposit - taking unit of the organization. some individual countries – france and germany, for example – have developed banking structure reforms that specifically address proprietary trading, but it appears that these proposals as well would require only a push - out of certain proprietary trading activities to non - bank affiliates. and just last week, the european commission proposed bank structural reform that would prohibit certain large european banking firms from operating standalone proprietary trading desks, though this proposal appears to differ from the volcker rule in a number of significant respects. it is also important to keep in mind that the volcker rule has limitations, and it is critical that the federal reserve and other agencies take a comprehensive and appropriately tough approach to monitoring and constraining the risks in all the trading operations of our largest financial institutions. capital regulation is at the core of that comprehensive approach. to that end, the basel 2. 5 and basel 3 capital reforms that the federal banking agencies have developed and adopted in final form in the past several years are crucial. bank liquid

institutions, these eu level regulations should be applied to all lenders providing housing loans. such regulations may not be needed right now. but they could be useful next time when the lending cycle starts to rise again. third, the eu legislation should explicitly allow the use of the so - called positive neutral countercyclical capital buffer requirement. national macroprudential authorities should be able to set that buffer requirement at a positive level during normal times. in times of unexpected and sudden crises, the buffer could be flexibly released, if needed, to support bank lending and economic recovery. 2 / 3 bis - central bankers'speeches dear friends, in addition to steven cecchetti's keynote starting in a minute, i believe you are eagerly awaiting the other two keynote speeches of this conference : alex jung's presentation on machine learning and michael platzer's on ai - generated synthetic data. before those, let me tell you about my forgotten history in computer programming. in high school – that is, only few years ago – i was an avid member of our school's automated data programming club. there we, for example, practised programming languages basic and fortran after school. unfortunately, the school did not have any computers! so, we wrote our basic and fortran codes only on paper. not surprisingly, the local football club's training matches, taking place at the same time, began to feel more attractive. so, the world lost one potential coder in me. i'll let you judge whether monetary policy was ultimately a winner or loser in that outcome. even more seriously, the potential threats and opportunities of artificial intelligence and machine learning are very hotly debated at the moment. i think we may assume that in the field of financial services, the developments in ai and machine learning can bring substantial benefits, for example in risk management, loan underwriting and customer behaviour analysis. the developments may also help the work of supervisors. that said, we should be aware of the potential dangers of the misuse of such powerful tools. above all, we should improve our understanding of these fascinating technological developments, also in order to make better policy choices. in that, the forthcoming keynote speeches will be most helpful. with these words, let me wish you a stimulating and productive conference! 3 / 3 bis - central bankers'speeches