based on the objectives of the facility. the current repo operations are conducted with only primary dealers and are designed to ensure a consistently ample supply of reserves to the banking system and support better interest rate control. as designed, these repos may have little effect on bank demand for reserves because the repo operations do not provide liquidity against hqla to a wide range of bank counterparties. a facility intended to affect reserve demand may therefore require different design features. - 13 exacerbating the issues i have discussed today. preliminary analysis suggests that changing those inputs to averages may be helpful. if we were to propose that change, it would not alter the stringency of the surcharge. as such, this option is something that we are actively considering. in summary, there are great benefits to safety and soundness and to financial stability for firms holding sufficient buffers of hqla to meet potential outflows in stress. i am not proposing any changes to this basic framework. what i am proposing is that we can potentially improve the efficiency of monetary policy implementation by improving the substitutability of reserves and treasury securities through adjusting our expectations for firms in stress - planning scenarios. there are a variety of approaches we could take, but i think the fed has a role to play. - 14 references bernanke, ben s. ( 2020 ). “ the new tools of monetary policy, ” presidential address to the american economic association, san diego, calif., january 4, https : / / www. brookings. edu / wpcontent / uploads / 2019 / 12 / bernanke _ assa _ lecture. pdf. board of governors of the federal reserve system ( 2019a ). “ minutes of the federal open market committee, june 18 – 19, 2019, ” press release, july 10, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20190710a. htm. — — — ( 2019b ). quarterly report on federal reserve balance sheet developments. washington : board of governors, november, https : / / www. federalreserve. gov / monetarypolicy / files / quarterly _ balance _ sheet _ deve lopments _ report _ 201911. pdf. — — — ( 2020 ). “ minutes of the federal open market committee, december 10 – 11, 2019, ” press release, january 3, https

daniel k tarullo : advancing macroprudential policy objectives speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the office of financial research and financial stability oversight council ’ s 4th annual conference on “ evaluating macroprudential tools : complementarities and conflicts ”, arlington, virginia, 30 january 2015. * * * standing in front of this audience i feel secure in observing that we are all macroprudentialists now. the imperative of fashioning a regulatory regime that focuses on the financial system as a whole, and not just the well - being of individual firms, is now quite broadly accepted. indeed, the two entities co - sponsoring this conference were themselves created by the dodd - frank wall street reform and consumer protection act, which reoriented financial regulation toward safeguarding financial stability by containing systemic risk – an aim that may not define all of macroprudential policy, but surely rests at its center. but beneath the high - level consensus for a macroprudential orientation lies a broad range of substantive views, as well as a host of analytic and practical questions, which form the subject of this conference and many like it. experience with macroprudential policy measures in various countries is not extensive and may, in any case, have only limited applicability elsewhere because of differences in economic conditions, the relative importance of capital market and traditional bank intermediation, and many other factors. and there is sometimes a tendency to overlook the significance of institutional and legal considerations in fashioning and comparing macroprudential policies. if macroprudential policy is to be more than a catchphrase, policymakers must confront these considerations in specifying how a macroprudential perspective will inform financial regulation. today i would like to suggest some specific macroprudential objectives that i regard as both realistic and important to incorporate into a near - to medium - term policy agenda : first, continuing the task of ensuring that very large, complex financial institutions do not threaten financial stability ; second, developing policies to deal with leverage risks and susceptibility to runs in financial markets that are not fully contained within the universe of prudentially regulated firms ; and third, dealing with the vulnerabilities associated with the growing importance of central counterparties. before discussing these specifics, i will begin with some brief observations on macroprudential tools and, in particular, the special difficulties associated with time - varying macro