Responsive policymaking means that we respond swiftly and appropriately to issues, favouring flexibility over a ‘one size fits all’ approach. This will ensure our framework is appropriate in light of the risks, and it will benefit industry by being more tailored. Our policies will be implemented in a way that minimises frictions, recognising that the creation of new rules is only one option we can take. Setting expectations for firms and effecting change through our supervision are alternative tools in our toolkit, and new issues should start with an open conversation, for example through a Discussion Paper. Being responsive means that we are alive to new concerns as they arise – we need only look to the events of last year that highlight the importance of this. And our aim to be accessible reflects our goal of ensuring prudential regulation is as clear as possible through reform of the rulebook. We are well aware that the ‘patchwork’ of primary legislation, statutory instruments, on-shored binding technical standards, and PRA rules and guidance currently in force, is difficult to navigate – a rationalisation of this material will yield benefits for us as well as firms. The realisation of this vision will take years of coordinated work. Legislation will need to be passed that sets out the framework of our new responsibilities and our new powers. Thereafter, rules will need to be transferred in the correct way from the statute book to our rulebook.
In other words, perhaps uniquely in the constellation of the Federal Reserve System, my colleagues and I work for you. My standing before you represents a visceral reminder of our accountability to depository institutions, independent of size, which rely upon our services to send and receive time critical payments; to maintain and permit the transfer of Fedwire eligible securities; and to provide cash services to support the needs of consumers and commercial establishments. It is with this orientation that I offer these remarks today, which reflect my own views and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System. The theme of today’s conference, appropriately, has been “Navigating Future Risks for Community Banks”. Allow me to elaborate upon the single risk that dominates from my vantage, regrettably not a “future risk” but an all too present one, and to highlight some of the measures that we are taking in response. The risk to which I refer is not a function of regulatory pressure, or capital demands, or an evolving economy, or compliance challenges, or the proliferation of new technologies, or an unprecedented season of payments innovation, or the challenging competitive landscape. All of these may represent very real risks, and no doubt occupy your consciousness, to borrow the lyrics of a prior generation, “eight days a week”.