recovery and resolution of systemically important institutions has been developed by the financial stability board. having this new standard is a big step forward. at the european level, a central pillar of the envisaged banking union is the single resolution mechanism. this instrument will allow authorities to restructure or resolve banks without putting taxpayers ’ money at stake. in the future, whenever a bank fails, resolution costs must be borne first by shareholders and creditors. after that, a bank - financed resolution fund is to come into play, and only as a last resort are public funds to be used and the taxpayers made to pay. bringing light to the shadows – the shadow banking system we have made good progress at the global and the european level in addressing the toobig - to - fail problem. however, discussions have mainly centred around the banking system. yet there are other parts of the financial system that might become a source of systemic risk. one of them is the shadow banking system. according to the financial stability board, the shadow banking system comprises “ credit intermediation involving entities and activities outside the regular banking system ”. what i think is relevant from a financial stability perspective is that such entities create bank - like risk without being subject to bank regulation. the overall effects of the shadow banking system on financial stability are ambiguous. theoretically, non - banking financial institutions that perform bank - like activities are associated with diversification and specialisation benefits. therefore, it could be assumed that they contribute to making the financial system more efficient and more resilient. however, developments in the run - up to the financial crisis revealed something else : activities and entities in the shadow banking system can pose a threat to financial stability. these potential threats are mostly the result of maturity and liquidity transformation, the build - up of leverage and credit risk transfer conducted outside the perimeters of bank regulation. all these activities are not evil per se, but the ensuing systemic risk needs to be contained. all activities must be made transparent, in particular vis - a - vis supervisory authorities, and they need to be adequately regulated. in that regard, i welcome the global regulatory initiative on shadow banking – again under the leadership of the financial stability board. bis central bankers ’ speeches and here too, international cooperation is essential for establishing effective regulation. a central feature of the shadow banking system is regulatory arbitrage : activities are shifted from the banking system to the shadow banking system in order to evade regulation. a geographically fragmented approach to regulation would not curb regulatory

lael brainard : introductory remarks for the fed listens panel on the covid - 19 pandemic introductory remarks ( via webcast ) by ms lael brainard, member of the board of governors of the federal reserve system, at " a fed listens event : how is covid - 19 affecting your community? ", sponsored by the board of governors of the federal reserve system, washington dc, 21 may 2020. * * * this will be the 15th fed listens event the federal reserve has conducted over 16 months. we have listened to diverse voices from every type of community in every sector and every district of our country. this rich set of perspectives is helping bring alive for us the importance of the review of our monetary policy strategy, tools, and communication practices led by vice chair richard clarida. we have heard that maximum employment is not captured in a single national average, it brings vital benefits, and it takes a very long time to arrive in many neighborhoods. we have heard that inflation matters : households at different life stages and in different places are balancing the cost of living against their earnings, while businesses are balancing wages and other costs against their pricing power. we have heard that access to credit matters, and that it is important to use the full range of tools to support the economy. when we embarked on this listening journey, little did we know that our nation would experience the heartache and hardship associated with the covid - 19 pandemic — an emergency unprecedented in modern times. last year, we heard from small businesses that were expanding their workforces and investing in their communities. today, many of those same businesses are running low on cash reserves and struggling to make rent and payroll — especially those in consumer services, such as restaurants and retail. last year, national unemployment had fallen to its lowest point in over five decades. today, unemployment has surged to levels not seen since the great depression. last year, historically challenged groups were gaining a foothold in the workforce, and employers were investing in training and loosening job eligibility requirements. today, the fallout from the covid pandemic has cruelly hit groups with thinner financial cushions the hardest — workers in the lowest quarter of earnings, people of color, low and moderate income communities, and women disproportionately employed in services jobs. as we think about how the federal reserve ’ s tools and presence in communities around the country could best provide stability at this trying time and strong support for the recovery