Williams: Two Sides of a Coin

Good morning. It's a pleasure to be with you this morning to open our discussion on the bank liquidity framework. Hal and his team have assembled a series of excellent panels that will further inform our approach as we consider adjusting this framework. The panelists' perspectives—including academics, market participants, and fellow policymakers—will enrich our understanding of these complex issues and, importantly, challenge us to think critically about whether the framework we have in place works as intended. Bank liquidity ensures that the banking system remains resilient.1 Regulatory requirements including the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR) were designed to ensure that potential cash withdrawal and repayment obligations could be met with on balance sheet holdings. Internal liquidity stress testing and resolution planning were also designed to require banks to assess liquidity positions, in preparation for monetizing assets under stressed conditions. In theory, these requirements should work together to mitigate the risk of a bank failure resulting from a lack of liquidity to meet its ongoing payment obligations and foreseeable cash outflows. Just in | Fed's Bowman refrains from discussing monetary policy or economic outlook in prepared remarks on bank liquidity regulations. FED'S BOWMAN: LIQUIDITY FRAMEWORK DOESN'T LOOK ENOUGH AT BANK STRESS ...

Thank you for the invitation to speak today. I look forward to our discussion. Events like this are essential to how the Fed operates and reflect the importance of the Fed’s regional structure. The district I represent at the Federal Open Market Committee (FOMC) covers a seven-state region, and discussions with local businesses and communities underpin my participation in the Committee. An important part of my job is to give voice to the concerns and insights of individuals in the 10th District when it comes to the economy and monetary policy. One of the benefits of the Fed’s structure, with 12 independent regional banks spread across the country, is that it allows a level of interaction and participation that would not be possible if operations were centralized in Washington. We are your Fed. You should feel a connection with this institution, and I hope our discussion today will make that connection more immediate and real. Before turning to the outlook for the economy and policy, let’s take a minute to look back. Way back. This year marks America’s 250th birthday. Though that might seem like some time ago, it is important to remember how new and revolutionary the United States was (and still is) as a system of governance and political organization. This is an experiment that has evolved and continues to evolve. But one outcome of that expe FED'S SCHMID SAYS NO ROOM TO BE COMPLACENT ON INFLATION SCHMID SAYS INFLATION IS HOT, DEMAND IS OUTPACING SUPPLY SCHMID SAYS DOES NOT MENTION IRAN CONFLICT IN PREPARED REMARKS SCHMID SAYS LABOR MARKET IS IN BALANCE