“For community banks, which by and large avoided the risky business practices that contributed to the financial crisis, we have been focused on making sure that much-needed improvements to regulation and supervision since the crisis are appropriate and not unduly burdensome,” Yellen said.
She said that the central bank was considering how its actions affect different-sized institutions and their customers and would tailor them accordingly.
President Donald Trump has criticised the Dodd-Frank Wall Street reforms which were formulated after the financial crisis, saying they hamper growth. But Yellen has defended financial regulation, saying it has "substantially boosted resilience without unduly limiting credit availability".
She did not comment on the state of the economy, or the upcoming decision on whether she will be reappointed as chair of the Fed.
Meanwhile the US today unveiled data showing that the service sector was accelerating, making an interest rates rise in December more likely.
US treasury yields rose on the news, but the dollar fell against the euro.