(Repeats with no change to text)

* Greater capital requirements could fuel risk taking

* Central bank can backstop liquidity. Moral hazard risk

* Contingent capital no substitute for resolution process

PRINCETON, NJ, Nov 13 (Reuters) - Banks could respond to bigger capital cushion requirements by taking on more risk, a top Federal Reserve official warned on Friday.

William Dudley, president of the New York Federal Reserve Bank, said requiring banks to have a greater liquidity cushion could lessen the likelihood of a liquidity crisis cascade but also made transactions more expensive.

"There is a cost to the firm from holding greater liquidity buffers in terms of lower returns on capital. So, requiring greater liquidity buffers would also tend to drive up intermediation costs. Banks could respond by taking greater risks," he said.

The prepared remarks to be delivered at Princeton University focused on lessons learnt from the crisis, and how a better financial system could be built.

Dudley, who as president of the New York Fed has a permanent vote on the Fed's policy-setting Federal Open Market Committee (FOMC), did not discuss the economic outlook or monetary policy.