Opening Remarks at the 2025 Financial Stability Conference: Financial Stability in a Time of Rapid Economic and Technological Change

After 13 years, this series has proven its value as the place to be for financial stability researchers, regulators, and practitioners. It was created at a time when the Global Financial Crisis was still fresh in our minds. Since then, many of you have contributed to a growing body of work identifying new vulnerabilities in the financial system and developing tools to counteract shocks that come our way. The pandemic shock—and the Fed’s robust and effective response—was a sharp reminder that when it comes to financial stability, you can never let your guard down. The Fed has a strong interest in financial stability, and not only because promoting it is one of our core functions. Financial stability supports our other objectives: fostering a safe and sound banking system, an efficient payments system, community development, and our monetary policy objectives of maximum employment and stable prices. So what do we mean by financial stability? A stable financial system is one that is resilient to shocks and one in which lenders are able to provide households, communities, and businesses with the financing they need to improve economic opportunities. Right now, my view is that the financial system meets this definition. Banks are better capitalized than they were a few years ago, despite lingering effects from unrealized losses on securities and loans from some older assets. Equally important, households in the aggregate are in good financial shape. While leverage is elevated in some parts of the financial system—including among hedge funds and life insurers—the overall picture appears sound.