damage that is done in its absence, when entities or systems fail, when liquidity dries up and when credit tightens to a crunch. to state the obvious, the benefits of financial services can only accrue if the system is resilient and if it is trustworthy. for, lest we forget, the reason any of this works at all is founded on trust. i can see the lawyers in the room protesting, and yes, there is of course a vast legal framework underpinning an array of financial contacts. but trust underpins the very notion of modern money, and thereby the very operation of the modern system of money itself. we trust that money we deposit at a bank is safe, and will be provided back to us when necessary. we trust that insurers can and will make good in the event of insured losses ; and that your pension will be well managed, and there when you need it. in addition to being trustworthy, the sector must also be resilient. for without resilience – both financial and non - financial – it is impossible to maintain trust through good times and bad. and indeed, as we have seen on many occasions, without trust there is ultimately no resilience, in that if one is lost the other is soon to follow. trust and resilience – through the cycle for this reason delivering trust and resilience is for me fundamental to ensuring that the financial system is well - functioning and operating in the best interests of consumers and the wider economy. we all have a part and a responsibility to deliver this, with important roles for regulators and supervisors but also for boards and management of financial services firms given it is you who bear the primary responsibility for managing the risks you face. for our part we deliver trust and resilience through the cycle through regulation, supervision and gatekeeping. 2 / 7 bis - central bankers'speeches regulation is the cornerstone of this delivery, providing a base - line of minimum standards, and working to aligning mis - aligned incentives. this includes capital and liquidity frameworks, our macroprudential measures, the consumer protection code, the individual accountability framework and the incoming digital and operational resilience act, to name but a few. while wholly necessary, experience has shown that regulation is not enough, and must be complemented by risk - based and active supervision, not merely to check compliance but rather to scrutinise risk management controls, culture and business risks and,

##rs and national banks, entities for which the federal reserve is not the primary supervisor, we will have a somewhat lesser role in the volcker rule implementation process. but as the primary supervisor for state member banks, foreign broker - dealer subsidiaries of u. s. bank holding companies, and state - chartered branches of foreign banking organizations, we will still have a role to play. staff of the federal reserve will continue to engage with staff of the other agencies and work together, to the extent appropriate and practicable, to help ensure consistency in application of the final rule to banking entities within their respective jurisdictions. indeed, shortly after adopting the volcker rule, the five agencies agreed to create an interagency working group in pursuit of this goal, and the group has already begun to meet. bis central bankers ’ speeches it remains to be seen whether other jurisdictions will adopt banking reforms similar to the volcker rule. while reforms dealing with the trading activities of banking firms have been recommended by the vickers commission in the united kingdom and by the liikanen group in the european union, neither of these approaches expressly prohibits a consolidated banking firm from engaging in proprietary trading. rather, these reforms bear closer resemblance to the traditional u. s. banking structure concept of ring - fencing depository institution subsidiaries of bank holding companies. most notably, under both vickers and liikanen, banking firms would be able to continue to engage in proprietary trading, but would simply be required to do it outside of the retail deposit - taking unit of the organization. some individual countries – france and germany, for example – have developed banking structure reforms that specifically address proprietary trading, but it appears that these proposals as well would require only a push - out of certain proprietary trading activities to non - bank affiliates. and just last week, the european commission proposed bank structural reform that would prohibit certain large european banking firms from operating standalone proprietary trading desks, though this proposal appears to differ from the volcker rule in a number of significant respects. it is also important to keep in mind that the volcker rule has limitations, and it is critical that the federal reserve and other agencies take a comprehensive and appropriately tough approach to monitoring and constraining the risks in all the trading operations of our largest financial institutions. capital regulation is at the core of that comprehensive approach. to that end, the basel 2. 5 and basel 3 capital reforms that the federal banking agencies have developed and adopted in final form in the past several years are crucial. bank liquid