would have to clearly illustrate that the adverse economic outcomes from more - restrictive interest rate i should note that increases in interest rates since last spring have increased discount factors and thus lowered the present value of pension fund and other fixed nominal liabilities. for instance, see fitch ratings ( 2013 ). bis central bankers ’ speeches policies would be better and more acceptable to society than the outcomes that can be achieved by using enhanced supervisory tools alone to address financial stability risks. i have yet to see this argued convincingly. macroprudential tools let ’ s discuss some of these macroprudential tools. one simple but important tool is enhanced monitoring. even before the recent financial crisis, central bankers were well aware of the key role played by stable financial markets in economic activity. since the crisis, however, the analysis of financial stability issues has been greatly expanded and given a more prominent role in the fomc ’ s deliberations. we comb through reams of data looking for evidence of incipient risks to financial stability. the federal reserve also has revamped its approach to bank supervision substantially to expand the focus on macrofinancial risks. traditional bank supervisory tools are being used more intensively, and new tools have been developed. bank capital stress tests are one wellknown addition to our supervisory toolkit. another is the augmentation of traditional microprudential supervisory work that analyzes individual institutions with efforts that take a wide - angle view of the banking industry. supervisors look to identify common trends across institutions and emerging concentrations of risks that might pose systemic threats to the financial system. this broad view also allows supervisors to better identify sound practices among firms and incorporate them into supervisory reviews and the feedback provided in them. the federal reserve also has greatly expanded its surveillance efforts to financial markets outside of the traditional banking sector, such as the insurance industry and financial market utilities. these efforts are not confined to financial institutions per se, and reach a range of activities that might pose a potential threat to financial stability. for instance, staff members from the chicago fed are actively engaged in assessing the role of high - frequency computerized trading in securities and derivatives markets and associated risks that might arise with it. these are just a few examples of regulatory tools available to monitor and promote financial stability. and there are a host of other instruments in our toolkit, such as resolution plans, liquidity requirements and single counterparty credit limits. all are examples of improvements in supervisory practices aimed at reducing the likelihood of systemic

##prudential tools. we have also reoriented our approach to supervision to take full advantage of the federal reserve system ’ s wide - ranging expertise on macroeconomic and financial developments and risks. i believe that these regulatory efforts can effectively minimize the risks of another crisis and increase the resiliency of the financial system. we can achieve these objectives without having to resort to wholesale changes to the financial system and without degrading our monetary policy goals. maintaining the effectiveness of the financial system for generating more - robust economic growth continues to be a crucial objective for public policy. thank you for your time, and i would be happy to take your questions. references evans, charles, 2014, “ recurring themes for the new year, ” speech, corridor economic forecast luncheon, coralville, ia, january 15. federal open market committee, 2013, meeting minutes ( external ), december 17 – 18. fitch ratings, 2013, “ fitch : u. s. corporate pension plans underfunded status improves, ” press release ( external ), new york, august 15. bis central bankers ’ speeches