The law overhauling the financial system should continue to protect the economy in the future despite any challenges it's faced in its first year of existence, a top Treasury official said on Wednesday.

Scaling back or repealing major parts of the Dodd-Frank Act or not providing regulators with the funds they need to implement the Act will leave our economy exposed to a cycle of collapses and crises, Treasury Assistant Secretary for Financial Markets Mary Miller said in prepared remarks for delivery to a securities trade group.

Miller's speech in New York marked the one-year anniversary of the passage of the Wall Street reform bill, known as the Dodd-Frank Act. A copy of her remarks was made available in Washington.

We are committed to implementing effective reform that encourages stability, which is necessary to restore investor confidence in our markets, Miller said in remarks to the Securities Industry and Financial Markets Association's Regulatory Reform Summit.

Debate continues on Capitol Hill over the final shape of Dodd-Frank as regulators continue to implement hundreds of new rules required by the law that oversee the financial system.

The law, signed by President Barack Obama on July 21, 2010, has been sharply criticized by Republicans who have pushed for repeal provisions in the House of Representatives.

Miller, a former bond investment manager who is nominated to take over as the Treasury's undersecretary for domestic finance, tried to addressed concerns that the new regulations would prove burdensome to financial institutions, saying regulators would strive for balance in rule-making.

We will ensure that reform is cost-effective by considering the costs and benefits. We are committed to getting the balance and details of reform correct so that markets can function effectively with consistent, transparent rules of the road, she said.

But she defended the Dodd-Frank approach to the over-the-counter derivatives market, which will put standardized derivatives onto open, transparent trading platforms. One exception to this approach is a Treasury determination that foreign exchange swaps and forwards will not be subject to exchange trading and central clearing, she said.

Higher capital and margin requirements for the largest derivatives dealers -- another source of industry criticism -- may divert capital away from investment, but Miller said this is critical to improving the resilience of the financial system.

Miller's prepared remarks did not provide any new details on her work in managing Treasury debt, which has now reached the $14.3 trillion statutory borrowing limit.

(Reporting by Margaret Chadbourn and David Lawder; Editing by Chizu Nomiyama)

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