1. These remarks represent my own views, which do not necessarily represent those of the Federal Reserve Board or the Federal Open Market Committee. Return to text
2. See, for example, Board of Governors of the Federal Reserve System, Financial Stability Report (Washington: Board of Governors, May 2023). Return to text
3. See Board of Governors of the Federal Reserve System, Dodd-Frank Act Stress Tests 2023. Return to text
4. For example, dealer balance sheet capacity may become strained, especially in times of volatile financial markets, limiting market funding in Treasury markets. See, for example, Darrell Duffie, Michael J. Fleming, Frank M. Keane, Claire Nelson, Or Shachar, and Peter Van Tassel, "Dealer Capacity and U.S. Treasury Market Functionality," Staff Report 1070 (New York: Federal Reserve Bank of New York, August 2023).Return to text
5. Of course, should a financial stability risk event affect the economy or the economic outlook, for example, through a slowdown in economic activity, monetary policymakers might take this into account when determining appropriate monetary policy. Return to text
6. This timeless principle was recently discussed in the current context by Tobias Adrian, Marina Moretti, Ana Carvalho, Hee Kyong Chon, Katharine Seal, Fabiana Melo, and Jay Surti, "Good Supervision: Lessons from the Field (PDF)," Working Paper 23/181 (Washington: International Monetary Fund, September 2023). Return to text
7. See, for example, Inter-Agency Working Group for Treasury Market Surveillance (IAWG), Enhancing the Resilience of the U.S. Treasury Market: 2022 Staff Progress Report (PDF) (Washington: U.S. Department of the Treasury, November 10, 2022); as well as, Darrell Duffie, "Resilience Redux in the U.S. Treasury Market (PDF)" (Federal Reserve Bank of Kansas City, Jackson Hole Symposium Paper, August 13, 2023). Return to text
8. For details on these programs, see "Funding, Credit, Liquidity, and Loan Facilities," Board of Governors of the Federal Reserve System, last modified July 7, 2023. Return to text
9. See Michelle W. Bowman, "Panel on 'Design Issues for Central Bank Facilities in the Future'" (speech at the Chicago Booth Initiative on Global Markets Workshop on Market Dysfunction, Chicago, Illinois, March 3, 2023). Return to text
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