Yellen, discussing lessons from the 2008 financial crisis at a conference co-hosted by the International Monetary Fund, noted that the current risks to financial stability are "moderated, not elevated."
But, she said, "equity market valuations are at this point quite high.
"There are potential dangers there," she said, but added there was no rapid credit growth and "no signs of a financial bubble."
"I believe we are better positioned now" to see risks, she said.
Yellen highlighted progress in spotting risks from the post-crisis regulatory reforms to address financial system weakness.