us of the potential for systemic risk if interlinkages develop between the crypto system that exists today and the traditional financial system. crypto - asset - related activity, requires effective oversight that includes safeguards to ensure that crypto companies are subject to similar regulatory safeguards as other financial services providers. i would note with some humility that striking the right balance between creating an environment that supports innovation and managing related risks to businesses, households, and the stability of the financial system is no easy task. we do not want to stifle innovation, but when regulation is lax or behind the curve, it can facilitate risk taking and a race to the bottom that puts consumers, businesses, and the economy in danger and discredits new products and services with consumers and investors. i believe everyone has a stake in getting the regulatory balance right. we are working closely with the occ and the fdic to assess the risks and opportunities posed by a range of crypto - asset - related activities, and to clarify which activities are legally permissible and can be conducted by banks in a manner that is consistent with safety and soundness, consumer protection, and overall stability of the financial system. before leaving the topic of crypto - assets, i would like to touch on stablecoins. stablecoins, which like other instruments that purport to be available on demand at par value, can be subject to destabilizing runs and require strong federal prudential oversight to mitigate their potential for economic harm. that is especially the case for stablecoins that aim to function as private money. legislative action on crypto - assets in general, and stablecoins in particular, would help promote responsible innovation and protect the financial system. 3 / 4 bis - central bankers'speeches climate - related financial risks we are also working to understand financial risks related to climate change. at the federal reserve, our mandate in this area is important, but narrow, and we are focused on our supervisory responsibilities and our role in promoting a safe and stable financial system. to that end, the federal reserve recently announced a pilot climate scenario analysis exercise designed to enhance the ability of supervisors and firms to measure and manage climate - related financial risks. scenario analysis - in which the resilience of financial institutions is assessed under different hypothetical climate scenarios - is an emerging tool to assess climate - related financial risks. the pilot climate scenario analysis exercise, which is distinct and separate from bank stress tests, will be explora

when oil is scarce ). social welfare is likely increased by informed speculation in oil markets because speculative activities make oil relatively more available at the times when it is most needed. 8 this discussion suggests three indicators to help us detect the influence of speculative activity on current oil prices. first, if speculative activity is an important source of the rise in oil prices, we would expect today ’ s oil price to react strongly to news bearing on future conditions of oil supply and demand. second, we should see speculative traders holding claims to large amounts of oil for future delivery, in the hope of enjoying a profit by re - selling the oil should prices rise. finally, corresponding to the speculative positions held by traders, we would expect to see significant increases in the physical inventories of oil being held for future use. the first indicator, rapid swings of oil prices in response to news about the prospective supplies and usage of oil, does appear to be present and to suggest a speculative element in pricing. it is thus somewhat puzzling that the other two indicators of speculative activity do not appear to be present : our best - available measure of speculative traders ’ holdings of contracts for future delivery of crude oil and petroleum products has decreased from earlier in the year and is not unusually high by historical standards. 9 and official data imply that physical inventories of crude oil and petroleum products, at least within the industrial countries for which we have good data, have not risen to any significant for example, we know of historical examples of speculators “ cornering ” a market, leading to wild price fluctuations unjustified by fundamentals. in addition to helping ensure that oil is used at the socially most valuable time, speculation also reduces risks for producers and consumers of oil. for example, an oil producer who sells oil for future delivery receives a guaranteed price today and does not have to bear the risk that the price will drop sharply before the oil delivery date. the measure used here is net long futures positions of noncommercial traders ( that is, traders who do not have a direct hedging need ). these data, available from the commodity futures trading commission, do not perfectly measure speculative activity, as they do not cover all trading in oil futures, nor do they necessarily cleanly distinguish speculators from other traders. degree and at times have even been below seasonal norms. 10 perhaps the official data overlook important accumulations of crude oil stocks - in china and other emerging - market economies, for example - but that remains ( if