is disorderly. that is why innovators are often referred to as “ disruptors. ” so, what makes climate - related innovations more disruptive or less predictable than other innovations? like the innovations of the automobile and the cell phone, i ’ d expect those stemming from the development of cleaner fuels and more efficient machines to be welfare - increasing on net. so where does that leave us? i don ’ t see a need for special treatment for climaterelated risks in our financial stability monitoring and policies. as policymakers, we must balance the broad set of risks we face, and we have a responsibility to prioritize using evidence and analysis. based on what i ’ ve seen so far, i believe that placing an outsized focus on climate - related risks is not needed, and the federal reserve should focus on more near - term and material risks in keeping with our mandate. - 10 i ’ d be happy to take a few questions. - 11 - references acharya, viral v., timothy johnson, suresh sundaresan, and tuomas tomunen. 2022. “ is physical climate risk priced? evidence from regional variation in exposure to heat stress. ” working paper 30445. national bureau of economic research. https : / / www. nber. org / system / files / working _ papers / w30445 / w30445. pdf. bernanke, ben s. 1983. “ non - monetary effects of the financial crisis in the propagation of the great depression. ” the american economic review 73 ( 3 ) : 257 – 76. bernanke, ben s., mark gertler, and simon gilchrist. 1999. “ the financial accelerator in a quantitative business cycle framework. ” handbook of macroeconomics 1 : 1341 – 93. https : / / www. sciencedirect. com / science / article / pii / s157400489910034x. bickel, kristian, sarah n. hamerling, and donald p. morgan. 2021. “ how bad are weather disasters for banks? ” staff report 990. federal reserve bank of new york. https : / / www. newyorkfed. org / research / staff _ reports / sr990. html. diamond, douglas w., and philip h. dybvig. 1983. “ bank runs, deposit insurance, and liquidity. ” journal

prices can fluctuate wildly at any time for no or little reason, then over time investors could require higher haircuts and regulators could see a need for even more hqla. how can we protect and strengthen the structure of these markets? in tomorrow ’ s session, several panels will discuss market structure, including potential risks to clearing and settlement infrastructure, and ask how current structures might be adapted to provide greater liquidity and better guard against liquidity risk. i would point to four important trends that have been driving the changing structure of these markets : first, advances in computerized trading and high - speed communications and the entry of new players using these technologies ; second, the intensified prudential regulation and supervision of the systemically important banks that are the largest dealers ; third, the banks ’ own re - evaluation of risk in the wake of the financial crisis ; and fourth, the increasing importance of mutual funds and other asset managers. while markets will always continue to evolve, there is no reason to think these trends will suddenly reverse. in all likelihood, they are here to stay. although post - crisis regulatory changes have likely increased the costs of market making, markets were already undergoing dramatic changes well before the crisis. high - frequency and algorithmic trading firms already accounted for a large and growing share of transactions in the interdealer market, altering the speed and nature of market making. as traditional dealers have lost market share, they have sought to remain competitive by internalizing a greater share of their customer trades, finding matches between their own customers and keeping those trades off the public interdealer markets. but internalization does not eliminate the need for a public market, which is where price discovery mainly occurs. dealers need to place the orders that they cannot internalize onto that market, and at times of market stress such as on october 15, they will likely need to put most of their orders onto the public market. the current structure of the trading platforms in both the cash and futures markets is based on a central limit order book, which provides for continuous trading but also provides strong incentives to be the fastest. there may be adaptations of this market structure that could give greater emphasis to liquidity provision rather than a never - ending competition for more speed. some of the panelists we ’ ll hear from tomorrow argue that it may be possible to do so, for example by considering frequent batch auctions as an alternative to the central limit order book, or by placing minimum time limits on orders. ideas