requirements. engaging in a piece by piece, regulation by regulation approach will likely have a similar outcome. technology we should also review and update the fed services available to support banking system resiliency. in payments, the federal reserve offers payments - related services including fedwire® to facilitate wire transfers. in the u. s., the federal reserve serves as the “ lender of - 15 last resort ” to the banking system, providing loans at the discount window since the early part of the twentieth century. these tools are important but are not effective mechanisms to rescue troubled institutions. discount window lending is available only to institutions that meet certain minimum eligibility standards, and that have collateral available to pledge. its function is to provide a solvent institution with a vital backup source of liquidity to meet unexpected customer outflows. similarly, the ability to process fast, efficient payments can also facilitate effective market functioning, but its utility is limited. in light of the extensive recent use of these tools and the lessons that can be learned, i think it is time to review these tools — which operate during limited, fixed hours and rely to some extent on dated technology — to determine whether they have kept up with the pace of change for the future payments landscape and expectations of liquidity planning. these tools must be nimble and flexible to support the banking system during times of stress. i think it is important that we understand how well these tools functioned in early march as two u. s. banks experienced stress and ultimately failed, and what can be improved regarding timeliness or effectiveness of fulfilling the lender of last resort function. the path forward my views on the path forward are informed by serving as the bank commissioner for the state of kansas as its lead regulator and supervisor, my experience as a banker, and especially by my service on the board of governors since 2018, during a time when the banking system has experienced many unique stresses including those associated with the covid pandemic. there have already been some preliminary and expedited internal reports published on the failures of svb and signature bank, and i fully expect to see additional reports and analysis of these - 16 failures, and the failure of first republic, in the coming months. 12 these preliminary reviews are an important first step for the u. s. bank regulators working to identify root causes of these bank failures and holding themselves accountable for supervisory mistakes. there are additional steps that we can take. first, i believe that the federal reserve should engage an independent third party to

. that requires striking a suitable balance between measures to minimise the probability of the bankruptcy of systemic institutions – by imposing supplementary capital buffers – and, in the case of more complex institutions, the design of contingency action plans which ensure orderly resolution if a state of non - viability is reached. this is, in essence, the content of the work undertaken recently by the financial stability board. in any event, the essential ingredient of orderly bank resolution schemes is the specification of a bail - in arrangement establishing a clear order of priority for the claims of shareholders and the various types of creditors that can be activated before insolvency proceedings are commenced and before any state aid is made available. the credibility of this framework will favour the appropriate perception of the risk effectively entailed by each liability instrument and will minimise the bill to be borne by taxpayers to prevent the disorderly winding - up of banks. in the european arena, we have progressed greatly in the definition of a regulatory framework for the resolution of non - viable banks. there is already political agreement on a proposed recovery and resolution directive which will establish a clear burden - sharing system for insolvent banks and thus minimise the possible cost of rescue for taxpayers. bis central bankers ’ speeches this directive is also a first step in the creation of a single resolution mechanism to supplement the nascent single supervisory mechanism which will enable a real banking union to be set up in europe. this project is essential to overcome the problems of fragmentation which still beset european markets and which cause the perception of risk associated with banks ’ liability instruments to differ depending on the jurisdiction in which they operate. however, as you know, to ensure that non - viable banks are resolved in the same way in the various member states of the euro area, it does not suffice to have a set of common regulations ; rather, it is necessary to have a single resolution authority to ensure that the regulations are applied uniformly in all countries. similarly, the financial support needed for orderly bank resolution must be available under similar conditions whenever required. clearly the lack of a full european resolution mechanism ( including uniform rules, a single authority and a common fund ) would limit the effectiveness of the single supervisory mechanism. in that case, the single supervisory mechanism would have to resort to a complex system of interaction with the national authorities ( which would have to continue using their resources to cover the fiscal effects of the problems of non - viability detected by the supervisor ) to ensure financial stability. in this