##ing the capital and liquidity standards for major banks, the regulatory community has made significant strides in many other areas. we developed a resolution framework for systemically important banks that better enables a failing bank to recapitalize with less risk to the rest of the financial system, and in a way that should not require taxpayer assistance. we reformed key segments of the financial system such as the money market mutual fund industry. we reduced the aggregate risk in the system by mandating the centralized clearing of otc derivatives. and, we strengthened the prudential oversight of those systemically important financial market utilities ( fmus ) that clear such activity. collectively, these reforms make the system more robust and resilient to the failure of a large, systemically important institution. thus, we have made considerable progress toward ending a regime in which some financial firms were “ too big to fail. ” we want to avoid the unfortunate situation where authorities are faced with a hobson ’ s choice : save a failing firm to prevent it from taking down the entire financial system, or allow the firm to fail but risk the collapse of the financial system. 1 / 6 bis central bankers'speeches nearly a decade ago, we suffered the worst financial and economic crisis since the great depression. in fact, we were perilously close to experiencing another depression. the harm the crisis caused americans can only be described as catastrophic. from november 2008 to april 2009, the economy lost an average of 700, 000 jobs per month. total employment in the united states fell by nine million jobs, and the unemployment rate rose to more than 10 percent. there was also a broad - based decline in home prices — about 30 percent on average, nationally. as a result, nearly 8 million foreclosures occurred, and the homeownership rate declined to levels not seen since the late 1980s. the crisis exposed many significant structural weaknesses in the u. s. and global financial systems. among them : systemically important firms were allowed to operate with inadequate amounts of capital and insufficient liquidity buffers, and were overly reliant on short - term wholesale funding. they were excessively complex and interconnected with each other and with the shadow banking system. large firms came up woefully short in monitoring, measuring and controlling the risks that could — and did — materialize under stress. securitization markets suffered from a number of defects, including poor design for many securitized products and misaligned incentives in the

capital and liquidity standards it is important to maintain appropriate capital and liquidity standards for large, complex firms to mitigate external shocks and the risks they pose to the economy. in particular, we need to maintain our focus on firms whose impairment would have significant negative consequences for the rest of the financial system. effective capital and liquidity standards help to limit these adverse consequences. at the same time, they work against conferring a competitive advantage to large banks from a perception that they may be too big to fail. accordingly, large financial firms have had to more than double their stock of high - quality capital since the crisis. prior to the financial crisis, large financial firms were not required to hold sufficient high - quality liquid assets to protect against runs, and, as a result, several would have failed if not for extraordinary government intervention. today, the liquidity buffers for large financial firms have dramatically improved in terms of both their size and quality. this is due in part to investors ’ demands, but also to the efforts by regulators and supervisors in the united states and abroad to develop appropriate liquidity standards for large banking institutions. some have argued that capital standards alone would be sufficient to mitigate the risks of failure. i am not convinced. as i just noted, the crisis clearly demonstrated the added importance of liquidity, as the firms that failed appeared to have been appropriately capitalized based on traditional regulatory metrics at the time. moreover, i strongly favor a system of capital and liquidity requirements that is harmonized on a global basis. some believe that the united states should no longer participate in international forums — such as the basel committee on banking supervision — that discuss and recommend minimum capital and liquidity standards for global banking institutions. the argument is made that these international bodies are dictating to and constraining the choices of the united states. that is simply not the case. the basel standards and other international efforts actually benefit the united states and its banks. in the preponderance of cases, agreements struck in these forums raise international standards closer to existing u. s. standards. establishing a more level playing field enhances the competitiveness of internationally active u. s. firms. it also makes the global financial system safer by ensuring that foreign banks are subject to appropriate standards that cover their global operations. this protects the u. s. households and businesses that transact with these banks in the united states and abroad. 2 also, it is important to note that the recommendations of these