Joint Press Release
September 03, 2014
Opening Statement by Chair Janet L. Yellen
Good morning. I'd like to welcome our guests to the Federal Reserve today as we take another important step to enhance the safety and soundness of our large financial institutions and the stability of the U.S. financial system.
The final rule before the Board would implement the liquidity coverage ratio in the United States, a regulatory requirement that will help strengthen the liquidity positions of large financial institutions. As the financial crisis demonstrated, most of our largest and most systemically important financial institutions used excessive amounts of short-term wholesale funds and did not hold a sufficient amount of high-quality liquid assets to independently withstand the stressed market environment. In the wake of the crisis, regulatory bodies from around the globe convened to develop the first internationally consistent quantitative liquidity standard for banking firms. The final rule under consideration today will complement the Federal Reserve's enhanced supervision and regulation of these firms' liquidity positions and thus further bolster financial stability.
We will also be discussing the re-proposal of the swap margin rule. Global policymakers and the Dodd-Frank Act have sought to reduce systemic risk in derivatives markets by moving standardized derivatives into central clearing and subjecting the remaining over-the-counter derivatives to bilateral margin requirements. The banking agencies issued an initial swap margin proposal in 2011 and today we consider a revised proposal that reflects comments on the 2011 proposal and internationally agreed swap margin standards finalized in 2013.
I look forward to today's discussion of these important initiatives. Let me now turn the meeting over to Governor Tarullo.