from year to year, and to explore even quite unlikely scenarios. if the stress tests do not evolve, they risk becoming a compliance exercise, breeding complacency from both supervisors and banks. we might also, inadvertently, encourage the development of a banking system where, over time, all banks would look much alike rather than the banking system we want and need, one with diverse institutions with different business models. we simply can ’ t let these things happen. the purpose of today ’ s gathering is to help us think about how to ensure the tests continue to foster a dynamic banking system, financial stability, and a healthy and growing economy. we have invited a wide range participants — fellow regulators, bankers, analysts, academics, and community groups — with diverse perspectives. because we do not claim a monopoly on knowledge or wisdom, we have invited many who have disagreed with us in the past. i strongly believe that diverse perspectives and healthy debate will sharpen our thinking and lead us to better answers. 1 / 2 bis central bankers'speeches i ’ m sorry i ’ m not able to be with you today. and i want to particularly thank all of the speakers, discussants, and other participants for helping us grapple with the challenges of ensuring that tomorrow ’ s stress tests remain as effective and vigorous as they are today. thank you. 1 1 the stress tests were announced in february 2009, and the results were released in may 2009. see, respectively, board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2009 ), “ agencies to begin forward - looking economic assessments, ” joint press release, february 25 ; and board of governors ( 2009 ), “ federal reserve, occ, and fdic release results of the supervisory capital assessment program, ” press release, may 7. 2 / 2 bis central bankers'speeches

william c dudley : global financial stability – the road ahead remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the tenth asia - pacific high level meeting on banking supervision, auckland, new zealand, 26 february 2014. * * * it is a pleasure to have the opportunity to speak here today. this is my first time in new zealand ( not counting a brief stop at the auckland airport ). i ’ m delighted to be here and am heading down to the south island tomorrow. today, i am going to talk about the challenges that face us in ensuring stability in the global financial system. while we have made considerable progress in strengthening the financial system – for example, large global banks have considerably more capital and liquidity resources than prior to the financial crisis – there is still a significant amount of hard work ahead for all of us. for example, we need to develop resolution mechanisms that will work on a global basis and we need to ensure that the clearing of standardized over - the - counter ( otc ) derivatives through central counterparties ( ccps ) is done safely. we also need to improve our ability to aggregate and share data. we need to do this in order to develop a coherent view of the global financial system so that we can deal with emerging vulnerabilities in a timely and effective way. as always, my remarks today reflect my own views and not necessarily those of the federal reserve system. in the years prior to lehman brothers ’ failure, critical vulnerabilities built up within the global financial system. banks evolved from being local in their geographic footprint, to national and then international in scope. supervision and regulation did not keep pace with these changes and capital and liquidity requirements were underdeveloped during this period. our view into the operations of global banks was too limited due both to shortcomings of banks in aggregating their internal information and to difficulties in sharing information globally across supervisors. at the same time, the so - called “ shadow banking ” system was growing in both size and complexity. particularly noteworthy was the proliferation of money - like instruments created outside of the traditional banking sector that were used to finance long - term, illiquid assets. in the u. s., protections against bank runs that were put into place during the great depression did not extend to this new shadow banking sector. put simply, we did not have a good picture of the global financial system. as a result, we were