Let’s not think of how we can reform, but how we can design. Let’s create a system that can better withstand the unforeseeable and the unpredictable. Conclusion These are difficult, complicated issues. But complexity doesn’t need to get in the way of getting back to principles or impede necessary action. Look no further to what we just accomplished with LIBOR. On January 1st, we are taking a giant leap in moving to a post-LIBOR world. That’s a monumental feat for financial market reform—and it was made possible by a significant, prolonged, and coordinated effort by the private and official sectors across the globe. With Treasury market reform, we must take the same approach of bringing together the best ideas from the public and private sectors. Three episodes of market dysfunction over the past decade are too many. Let’s work together to build a system that is truly resilient and can withstand the challenges of our time—and of the future. Thank you. 1 Recent Disruptions and Potential Reforms in the U.S. Treasury Market: A Staff Progress Report, Inter-Agency  Working Group for Treasury Market Surveillance, November 8, 2021. 2 For a history of the Desk statement on repo operations during that period, see Repo and Reverse Repo  Operations: Statements and Operating Policies. Details on the parameters of the repo operations during this 3/4  BIS central bankers' speeches  period can be found at Historical Repurchase Agreement Operational Details.
This is not a choice. If we don’t act effectively, the repercussions on the U.S. economy—and the global economy—are severe. In each of the past two notable market dislocations, the dysfunctions arose swiftly, and we, too, acted quickly to take steps that were effective in restoring the functioning and confidence in markets. But each event exposed weaknesses. Over time, weaknesses can erode confidence. So now, the challenge before us is this: How do we strengthen the most important market in the world in a way that helps us avoid having to take dramatic steps to cure impairments during the middle of a future crisis? How do we prepare for what we can’t foresee and can’t predict? Think Differently One thing that is clear when examining the causes of these market disruptions is that they were not primarily driven by economic forces, but rather by a failure of the markets to function in the ways they were expected to do in response to those particular circumstances. These sharp market disruptions teach us important lessons. A number of experts in this field— including the IAW G—have been doing excellent work in identifying potential solutions to ensure that similar disruptions don’t happen again. It’s essential that we all continue to work together to increase the resilience of the Treasury market—and this conference is a great opportunity to move that process forward. It’s also clear that we need not start from a position of how things are, but instead, how they should be.