Good afternoon and thank you for joining us today to discuss some important issues related to central counterparty clearing. On behalf of the Federal Reserve Bank of Chicago (Chicago Fed), I want to thank our host and cosponsor of this conference, the European Central Bank (ECB). This has been a wonderful opportunity for us to discuss these issues with experts from around the world, and I hope that the participants here today have found these discussions helpful. The ECB and the Chicago Fed have worked together closely to plan the conference and agenda, and it has been a very good partnership.

Today, I’d like to share with you my thoughts about the important role that clearing and settlement institutions play in supporting financial markets. In particular, my remarks today will revolve around four key questions related to central counterparty clearing. First, what economic functions do central counterparties, or CCPs, perform in the clearing and settlement of financial transactions? Second, what alternative institutions can perform the same or economically equivalent functions? Third, what are the costs and benefits of using CCPs as compared with alternative clearing institutions? And fourth, what do these costs and benefits tell us about public policy decisions that should be made concerning CCPs and alternative institutions?