##ps must now plan for a world in which these large firms will fail and be resolved without government support. recognizing the importance of strengthening our financial market infrastructure, the regulatory community has clarified and significantly raised expectations for ccps and all key financial market infrastructures ( fmis or market infrastructures ). these heightened expectations are set forth in the principles for financial market infrastructures ( or pfmis ), which were adopted in 2012 by the committee on payment and market infrastructures ( cpmi ) and the international organization of securities commissions ( iosco ). 3 the pfmis lay out comprehensive requirements for financial market infrastructures, including ccps. clearing and settlement activities are cross - border and indeed global in nature. major u. s. financial institutions interact with market infrastructures around the world. the pfmis have established a rigorous set of internationally agreed upon standards for the quality and these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. g20 leaders statement : the pittsburg summit ( pdf ), september 24 – 25 2009. committee on payment and settlement systems and technical committee of the international organization of securities commissions ( 2012 ), “ principles for financial market infrastructures ( pdf ), ” final report, april. bis central bankers ’ speeches quantity of loss - absorbing resources and liquidity, governance, risk management, stress testing, recovery and orderly wind - down, and other key areas. i believe that there has been reasonably good progress in implementing these reforms here in the united states. for example, according to the financial stability board, over 70 percent of new u. s. interest rate and credit derivatives are now centrally cleared. 4 and the federal reserve and other u. s. regulatory agencies have recently announced final margin rules for uncleared derivatives as well, which should enhance the resilience of trading that still occurs outside of central clearing. 5 but there is still plenty of work left to do. ccps are implementing the pfmis under the oversight of national regulators ; clearing members have been vocal commentators on this process. to assure that the standards are consistently implemented across jurisdictions and across fmis, cpmi and iosco are conducting joint reviews of the risk - management practices of a range of global derivatives - clearing ccps. working in conjunction with the basel committee on banking supervision and the financial stability board ( fsb ), they have also set out a detailed work plan for further enhancing the resilience, recovery

at the same time, the average coupon on outstanding corporate bonds remains considerably above rates on new debt issues, suggesting that firms are well positioned to cut their debt service burdens still further as outstanding bonds mature or are called. the net effect of these trends to date has been a decline in the ratio of business interest payments to net cash flow, a significant increase in the average maturity of liabilities, and a rise in the ratio of current assets to current liabilities. with business balance sheets having been strengthened and with investors notably more receptive to risk, the overall climate in credit markets has become more hospitable in recent months. specifically, improvements in forward - looking measures of default risk, a decline in actual defaults, and a moderation in the pace of debt - rating downgrades have prompted a marked narrowing of credit spreads and credit default swap premiums. that change in sentiment has extended even to the speculative - grade bond market, where issuance has revived considerably, even by lower - tier issuers that would have been hard - pressed to tap the capital markets over much of the last few years. banks, for their part, remain well - capitalized and willing lenders. in the past, such reductions in private yields and in the cost of capital faced by firms have been associated with rising capital spending. but as yet there is little evidence that the more accommodative financial environment has materially improved the willingness of top executives to increase capital investment. corporate executives and boards of directors are seemingly unclear, in the wake of the recent intense focus on corporate behavior, about how an increase in risk - taking on their part would be viewed by shareholders and regulators. as a result, business leaders have been quite circumspect about embarking on major new investment projects. moreover, still - ample capacity in some sectors and lingering uncertainty about the strength of prospective final sales have added to the reluctance to expand capital outlays. but should firms begin to perceive that the pickup in demand is durable, they doubtless would be more inclined to increase hiring and production, replenish depleted inventories, and bring new capital on line. these actions in turn would tend to further boost incomes and output. tentative signs suggest that this favorable dynamic may be beginning to take hold. industrial production, as i indicated earlier, seems to have stabilized, and various regional and national business surveys point to a recent firming in new orders. indeed, the backlog of unfilled