), which i chair, and the international organization of security commissions ( iosco ), have proposed a comprehensive set of operational standards for fmus, which i expect will be finalized early next year. we expect that these principles will be endorsed and adopted by the g20 countries, establishing a minimum standard for important fmus around the world. however, progress is slow and uneven. for example, it is unlikely that the g20 countries will meet the goal to clear all standardized over - the - counter derivative trades through central in general, i think progress on liquidity is inherently more difficult than on capital because tougher liquidity standards conflict with one of the basic function of banks - maturity transformation. savers want to hold their funds in highly liquid, short - term assets. but borrowers want to lock up their funding over long time periods. banks help bridge that gap. pushing banks hard on the liquidity side runs up against this constraint. bis central bankers ’ speeches clearing counterparties by the end of 2012. similarly, i have my doubts whether the next set of industry recommendations to reduce risk in the triparty repo market will be sufficient to eliminate all the major potential sources of instability – including inadequate risk management practices and lack of resiliency to a dealer default. experience suggests that it is not easy for market participants to agree on measures that enhance financial stability when this goal conflicts with the commercial and business interests. if the private sector falls short in this instance, public authorities may need to intervene and impose more forceful regulatory solutions. i also think that the scorecard is mixed with respect to making financial institutions, in their practices and structure, less prone to amplifying and propagating shocks. on one hand, the capital rules and the ccar process should cause banks to husband their capital better during times of stress than was the case during the financial crisis. also, compensation practices are improving in that more pay is deferred and over longer time periods. similarly, risk management practices have improved. institutions are better able to aggregate and assess their risk exposures within short time periods and stress testing means that there is a better understanding of how these exposures might perform in adverse environments. but our task remains unfinished. while progress on reforming compensation practices is welcome, i recognize that there is still much to be done before we can truly say that incentives are lined up in a way that fully supports financial stability objectives. we have work to do on the information front too. consider the issue of international

that it expects to keep interest rates at this level until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. 2 bringing interest rates down to near zero serves two purposes. first, low interest rates make it easier for households and businesses to meet their borrowing needs. second, they foster broader financial conditions that will help promote the rebound in spending and investment needed to return the economy to full strength. the new york fed the new york fed has important and unique responsibilities in supporting liquid and wellfunctioning financial markets. working alongside our colleagues in the federal reserve and other agencies, we are taking rapid and significant actions to supply liquidity and to stabilize critical parts of our financial system. by conducting large - scale repo operations and purchasing sizable quantities of u. s. treasury securities and agency mortgage - backed securities, we are providing funding and stability at a time of extraordinary volatility in markets. 3 these actions averted a potential shutdown in the availability of credit, which would have made the current economic crisis even more severe. in addition to stabilizing financial markets, the federal reserve is standing up programs to support the flow of credit to households, businesses, and state and local governments. these actions will enable them to continue to do their work, both now and when normal life resumes. 4 2 / 3 bis central bankers'speeches our efforts supporting the provision of credit include a number of programs aimed at different parts of the economy and work through different channels. one set of programs supports the availability of credit to households and businesses — importantly, including small and mediumsized businesses. a second set of programs targets the availability of credit to states and municipalities. fiscal policy is also playing a critically important role. in particular, it can do what monetary policy cannot : provide for the public health response and transfer income to those most affected by the outbreak. fiscal policy is also a vital partner in the delivery of our own programs, supplying the financial support necessary for the extraordinary scale of the credit facilities we ’ re operating. conclusion i ’ ll conclude with this : these are extraordinary times, and the fed is taking extraordinary actions to ease the economic pain. this is anything but a typical recession, and it has called for a new set of measures to address the economic consequences of the virus. amid all the change we ’ re experiencing, you can be assured of one thing : our unwavering commitment to limit the economic damage from the pande