the financial system. the program or facility will not be considered to have a broad - based eligibility if fewer than five persons or entities would be eligible to participate, or if it is designed to assist a company avoid bankruptcy, resolution or insolvency ( including by removing assets from its balance sheet ) or aid a failing financial company. see regulation a, 12 cfr 201. 4 ( d ). in addition to the “ unusual and exigent ” circumstances and broad - based eligibility requirements, other conditions for making section 13 ( 3 ) emergency credit include obtaining the affirmative vote of a requisite number of federal reserve governors and the prior approval of the u. s. treasury secretary, the emergency credit is not extended to an insolvent borrower, the lending federal reserve bank is secured to its satisfaction, evidence is obtained regarding the unavailability of adequate credit accommodation from other banking institutions under prevailing circumstances to borrowers of the emergency credit, penalty interest rate is set for the emergency credit, and meeting disclosure / reporting requirements. see section 13 ( 3 ) of the federal reserve act ( 12 usc 343 ) and regulation a ( 12 cfr 201. 4 ( d ) ). bis central bankers ’ speeches in the u. s., given the restrictions on central bank lending, if a securities firm were to lose access to funding the remaining options available would be finding a means of replenishing the firm ’ s capital, selling assets, or selling all or part of the securities firm ’ s operations. while this might be manageable in the case of a firm - specific idiosyncratic shock, it might prove more difficult if a common shock was broadly hitting the securities industry. in this circumstance, the failure of one firm could increase the stress on other firms that were facing similar difficulties. if all of the requirements for section 13 ( 3 ) are met, the central bank could provide liquidity support. however, since this is not a certainty, it is worth considering possible alternatives. now that all major securities firms in the u. s. are part of bank holding companies and are subject to enhanced prudential standards as well as capital and liquidity stress tests, providing these firms with access to the discount window might be worth exploring. to me, this is a more reasonable proposition now than it was prior to the crisis when the major dealers weren ’ t subject to those safeguards. more generally, i am happy to report that the committee on the global financial system – one

##c with excellent control over the federal funds rate and predictable pass - through of the monetary policy stance into broader money market conditions. transaction - level dispersion measures demonstrate markets that are competitive, and suggest that the effects of policy tightening are realized as expected and intended. these markets, and our framework, have proved resilient to major shocks to the structure of money markets, including the reshaping of the money market fund industry. i remain highly confident that our framework will continue to perform very well. nevertheless, we should continue to monitor the possibility of a growth in dispersion in broader money market rates. gathering more and better data about money markets is a useful step in this direction, and one at which my colleagues and i are actively engaged. learning more about policy transmission through theoretical and empirical modeling is another useful endeavor. as stated in a recent bank for international settlements report, “ financial regulation aims to influence the behavior of banks and other financial intermediaries to enhance their resilience and support financial stability. given that those same intermediaries interact with central banks in the context of monetary policy implementation, changes to the regulatory environment are bound to have effects that central banks will need to take into account. ” 38 economic and financial stability are closely interconnected ; for example, monetary transmission was reliably effective in 2007, but in 2008 became quite impaired as a result of systemic financial stress. in navigating these issues, my colleagues and i are aided by the integration of policy analysis across disciplines at the federal reserve system, an arrangement which provides an ongoing breadth and depth of perspective. thank you for your attention. 1 i would like to thank james egelhof and antoine martin for their assistance in the preparation of these remarks, adam biesenbach for his assistance with the calculation of the dispersion indices presented here, logan suba for his assistance with data, and colleagues in the federal reserve system for numerous insightful comments and suggestions. 2 see, for example : bernanke, “ implementing monetary policy, ” march 30, 2005 ; ihrig, meade and weinbach “ rewriting monetary policy 101 : what's the fed's preferred post - crisis approach to raising interest rates?, ” journal of economic perspectives, fall 2015. 3 conceptually, the federal funds rate is a measure of what banks pay to take out unsecured overnight loans from other banks, government - sponsored entities, and certain other entities. the technical definition of a federal