I think you have stuck to your guns so far but i want you to keep sticking to your guns. I would like to turn to some questions about facebook and its proposed cryptocurrency, libre. I am a supporter of innovation in the Financial Sector. Cryptocurrencya could really deliver real for increased friction and more access for consumers. As somebody who has spent the last couple of years dealing with social media and facebook in particular, i think it would facebook hasy that developed something of a trust deficit and that and that the kind of Silicon Valley mindset of move fast and break things maybe works when you were thinking about it in a Technology Framework but when we are thinking about the kind of implications social media has had around consumer privacy, public discourse, that no regulation does not always work. The House Financial Services committee, yesterday, you noted post many concerns, including potential risk to the security of the financial system. Aboute your concerns Systemic Risks, Money Laundering, privacy and other items. Fdicpast week, the former chair called him the fed to exercise additional oversight over libra, possibly as it is more built out and the facebook havet, the ability to credit disruptions and consumer losses, financial mismanagement of the reserve. The truth is we could be systems without the type of Regulatory Oversight thatled to the gaps created the crisis is that were pointed out the crises that were pointed out. Up with that same circumstance. Could you expound a little bit on what you see around these and thery risks liquidity risks presented by libra . Chair powell we need to do a very key full a very careful Patient Assessment of what the risks really are and that will take time and the idea that this would be going into implementation within 12 months is not going to be prudent proved right. We are going to take more time than that. One ofntioned earlier, the key issues is that there is not a single credible Regulatory Authority that can be responsible for oversight and held accountable for its oversight. It falls into many pockets. We are going to be looking at that. I would not want to prejudge what we do. Be that we have not been great recently at getting things across the finish line. My hope would be that you take a serious look here. I think back to concerns i had back in the late 90s when social media was set up. I was the telecom guy and rules of the road that were set up were these were done pipes, we were not going to put regulatory structure around it and we are 20 years later, 65 percent of americans get their news from facebook and google. We have the ability to disrupt our democratic processes. We see hate speech from either end of the political spectrum being brought forward. I would be concerned as we think about the innovation in this space, that we dont make the same mistakes back in the late that we do more with this innovation and make sure there is going to be access for thirdparty wallets, not just a facebook product, that we think about thirdparty developments 30 thirdparty developers to plug into this stuff the system. Getting this right is so terribly important. I look forward to working with you and the other regulators to make sure we get it right. Chair powell thank you. This has gotten peoples attention in a way that is very clear, not just ours but the other regulatory bodies around the world. Facebook has taken advantage in the gap within the current system. We have to make sure we dont have more gaps in the financial system. Senator rounds. Chairman powell, thank you for being here today. Before i begin, i wanted to comment on the insurance capital standard being developed by the iaias. My fellow congressmen hit it on that nail yesterday when he made it clear that anything that fails to recognize the method in the unit it states is unacceptable and i appreciated your comments agreeing with that. Iris i appreciate the response from the vice chairman on this issue but i remain concerned that the eu is using as a backdoor. The eu insurance regulator took a victory lap at the end of their latest annual reports, that they achieve their goal of having solvency as the practical of the iaics. Moving forward we want to see a strong assertive response from the u. S. To the iais. My first question concerns the capital plans that banks are required to develop under the framework. The ceo of jp morgan, one of the banks required to per dissipates at some the about the annual shareholders letter i found rather striking. Feds mostr the extreme stress testing scenario where 35 of the largest american losses, thextreme combined losses are about 6 of the total losses or resources of those 35 banks. Jp morgan chase alone has nearly three times the loss absorbing resources to cover the projected banks. Of all of these 35 to chairman, it seems absurd me that we are forcing an institution like jp morgan to hold not just enough capital to cover its own losses but also the losses that the other 35 largest institutions three times over. The capital tied up is capital that could be deployed to help firsttime homebuyers or lete a home ors main street entrepreneurs start a business. In boston earlier this week, capital stress test were said to be more predictable and easier for firms to pass. My question would be, do you agree that see card framework should be revised . That wewell i think are going to have to continue to the check the tests will have to evolve over time where they will become out or they will become out of touch with the reality. We are committed to making the appropriate changes. The banks obligation is to have a minimum level of capital post stress and they will want to have a buffer on top of that. That is the test they have to pass and we dont want them to be able we have made a pretty good judgment about what that minimum amount would be. I think the level of capital in the system is just about right. I do not think it should be less , particularly for the largest banks. Onre are lots of work going and this was the subject of that conference in boston on monday or tuesday. We are going to preserve the overall strength and power of them while making them more transparent. I i appreciate that and understand the Capital Requirements are important, it just seemed surprising to me what the current guidelines would do in terms of the amount of capital they are and i think there is a cost, when you maintain that versus being able to put that back out in terms of loans to places that need it. I recognize this is something that is ongoing but i just want to point out, it seems to be a little larger than i wouldve ever expected it to be in terms of the capabilities today. Chair powell the level of capital that we have required of the largest institutions in particular is about right. It is high. It is not even been 10 years since the financial crisis. We have not been through a downturn. It is too early to be talking about reducing those standards. One other question on the sammy on the semiannual Monetary Policy report, as well as commercial and residential to continue to grow into 2019 and that Bank Profitability remains solid in the First Quarter of 2019. I was encouraged to read this because of the pressure that farmers face due to trade disputes have led to whether or not banks will continue to make loans in the big sector in the aggie sector in the ag which during this time in net farm income is down 5 . Chair powell the answer is yes. Our farm belt banks have had a lot have had a lot of experience in dealing with the issues that farmers are can confronting right now and as a whole, the Agricultural Sector is in a tough place. It is a tough time and i know that banks are trying to work through those difficulties with farmers. Very good. I appreciate the work youre doing. Chairman. Ou chairman powell, thank you for being here. I will ask a series of questions about Severe Weather and Climate Change and the first thing i want to say is that i dont expect Monetary Policy to solve Public Policy problems but i do think it is important in your supervision capacity that you measure risk accurately and completely until the first question i have is, does increased Severe Weather pose a risk to the institutions that you supervise . Chair powell yes. Require this, we do Financial Institutions that we supervise to have a plan and understanding to deal with Severe Weather, particularly those that are in areas exposed to increased risk of Severe Weather. Chair powell does severe is Severe Weather increasing due to Climate Change . Chair powell i believe it is, yes. Has the fed changed its approach in assessing Severe Weather risk over the last 10 or 20 years . Chair powell we had a policy in place. There has been quite a lot of Research Done at the fed around Severe Weather and its effect on the economy. We do incorporate that into our supervision of these institutions. Ofting edge understanding the effect of Severe Weather events on the economy. We do incorporate that into our supervision. Has the process change . Process changed . Chair powell i would have to go back and look. Is severeson i ask weather, generally speaking over the last 10 or 20 years has been that cannotomething be helped into a certain extent it cannot be accounted for, except that there is this outside risk but when that risk of a 500 year storm arises in 15 years. The question becomes, are your systems adequate to the conditions on the ground . I can take that for the record if you dont want to puzzle through it. Chair powell one way to get at that is to go back to superstorm sandy. In a world where you have water lapping at the foot of the new york fed which is not that close to the water in downtown manhattan, you know you are going to need robust plans and redundancy and all of those things to deal with Severe Weather. We know that and we do apply high standards to the key payment utilities and other Financial Institutions. Chair powell let me reach let me read you something from the bank of england. Is cost of Climate Change having a devastating effect as financial policymakers and credential supervisors, we cannot ignore the obvious risks before our eyes. We must integrate the monitoring of climaterelated financial risk into the daytoday supervisory work of Financial Stability and board risk management. Do you agree with the bank of england . Chair powell i guess i see Climate Change as a longer run issue. I dont know that incorporating it into the daytoday supervision of Financial Institutions would add much value. Let me make the case for daytoday supervision, especially credential supervision. You mentioned cybersecurity risk, political risk, Balance Sheet risk. You measure risk. This risk is accelerating. I understand the desire for the fed to stay out of the political fray and out of the Public Policy fray, but this risk is accelerating and i am satisfied that you are puzzling through this and that the staff is trying to get this right, but i am not satisfied that you are drawing the correct distinctions climate andher and that you are adequately accounting for the increased frequency and severity of Severe Weather events, due to Climate Change and there is one other part of Climate Change that is not just individual events, but it is changes in weather patterns that could cause individual portfolios to be more at risk. Do i have your commitment to continue to work with our office on this problem, especially given that more than a dozen Central Banks around the planet are working really hard on this, and without an ideological lens, but just to try and adequately measure the risk . Chair powell yes. There is nothing really going on in the other Central Banks that we are not aware of as i think you know. Thank you. Senator purdue. Mr. Chairman, thank you for your forbearance, your second day going through this. I would like to go back to the topic that we covered just a little bit earlier. Today we have in the world about 60 trillion of sovereign debt. The United States has about 22 trillion of that. Corporate debt in the states between the last decade, 2008 and 2018 about doubled but still only represents about 4 of more than 60 trillion in overall u. S. Capital market assets. My question after reviewing all the data around corporate debt, sovereign debt and the increase in corporate debt, do you believe that leveraged leaning lending has reached a point to become a Systemic Risk . If so, could you explain what information you used to look at that . Chair powell as far as corporate debt is concerned, i would tell you i do not see it as rising to the level of Systemic Risk or a Financial Stability risk which we think of is something that could threaten the funding ash threaten the functioning of the financial system. Funding the functioning of the financial system. Leveraged lending is held in a collateralized loan and those are marketbased vehicles. They are not on the Balance Sheet of banks. They are not runnable. It was runs during the crisis that caused a lot of damage. The funding for those vehicles had longer expected life and the assets that they own. That is an important thing. The next biggest holder of that paper is mutual funds and those in theory could be subject to accelerated withdrawals and not kind of thing. We monitor that carefully but we have seen them weather lots of downturns. Empirically we have seen them weather downturns and spikes and volatility. We are very focused on monitoring it and confirming that it does not evolve into something that could threaten the system. In the meantime, it clearly can be an amplifier to an unexpected Macro Economic downturn. I tried to buy a cup of coffee in china last year with a credit card or cash and you just could not do it. It was all we pay, et cetera. With the cryptocurrency question you had earlier, it seems to me that technology is running ahead of us and our ability to look at how currency is managed around the world, and the impact that it could have on how weaver the last hundred years or so have used reserve currency in the world and we benefited from that in the United States, the ability to borrow 22 trillion of debt depends heavily on our ability to be the reserve currency and the dollar is a reserve currency. What risk to the structure itself and the fact that the dollar has enjoyed for 100 years now, being the reserve currency . Chair powell being the reserve currency does confer benefits and costs and one of those is, one of the potential costs is that you are a little bit immune from market discipline because Everyone Wants to be in the most liquid asset and it tends to be a pretty stable equilibrium. There tends to be one reserve currency that tends to last for a long time but if you were going to keep that role, you have to run your fiscal have successfully. You have got to be running a sustainable fiscal policy and in the near term i dont think there is anything to threaten but in the medium and longerterm, we will have to address our fiscal issues. Decade 32 trillion in a , approaching 50 of all sovereign debt in the world at that point, because a lot of other countries are deleveraging, all of a sudden, and you are medium to long term, but at the next decade, we will more, that near to long term definition could fall in within the next decade or so could it not . Chair powell you have to have another reserve currency that has more attractive features. The rule of law, we have institutions, we are a trading nation, we are open to trade and we have a highly developed financial system. When you are the reserve currency, you can have inflows and outflows and you have to have a Financial Sector that absorb and manage that, otherwise you will have spikes in inflation and currency volatility. Another currency would have to emerge that could take over that role and there really isnt one right now that can check all those boxes. In the Market Basket concept has no more appeal today than it did a decade ago. Chair powell it has not taken off. Nonetheless, we should not assume that it will last forever because it wont. Thank you for being here. Senator smith. Thank you so much for being here today. I appreciate your service and i want to note that i believe in the first 30 seconds of your testimony this morning, you used the word independence. I believe i have heard colleagues on both sides of the aisle pay tribute to how important it is to have an independent fed. I would like to thank you for that, your steadfast defense of that. I want to quickly follow up on comments that my colleagues said. Senator tester asked what is going to tip the scale too bad when it comes to longterm economic prospects, and i would like to just for the record say that i do believe that our increasingly volatile climate, Climate Changes on the same scale as the longterm threats to a growing national debt