- day reporting regimen to monitor its progress. given our concern that the organization needs to use its resources to address its deficiencies, rather than expanding, the federal reserve also asks the organization for advance notification before entering into any contractual commitments or making public announcements pertaining to prospective acquisitions that require federal reserve approval. the agency can then determine the possible effects of the expansionary [UNK] proposal on the organization ’ s deficient y2k readiness efforts, and possibly discourage or deny expansion if financial and managerial factors are inconsistent with approval of the application. 5. outreach initiatives the federal reserve is actively participating in numerous outreach initiatives with the banking industry, trade associations, regulatory authorities and other groups that are hosting conferences, seminars and training opportunities that focus on the year 2000 and help participants understand better the issues that need to be addressed. throughout the country, the federal banking agencies have been working with state banking departments and local bankers associations in order to develop coordinated and comprehensive efforts to improve the local and regional programs intended to focus attention on the year 2000. these efforts will continue consistent with the requirements contained in the examination parity and year 2000 readiness for financial institutions act ( public law 105 - 164 ), enacted march 20, 1998, which call, in part, for the banking agencies to conduct seminars for depository institutions on the implications of the y2k problem on their ability to conduct safe and sound operations. 6. international scope the federal reserve has worked actively within the bank for international settlements ( bis ) to ensure that financial regulators around the world are aware of the dangers posed by the year 2000 and are working to see that the markets and institutions they oversee are ready for the century date change. last september, the g - 10 governors issued a year 2000 advisory that included a paper prepared by the basle committee on banking supervision ( basle supervisors ) describing the serious nature of the problem, identifying the issues that must be addressed, and outlining how programs to address the issue should be structured. the bis committee on payment and settlement services ( cpss ) has established a web site on which payment systems around the world are posting short reports describing the status of their readiness in order to promote the transparent sharing of year 2000 information. we continue to participate in international meetings focusing on the year 2000 issue in order to increase awareness and promote greater understanding and cooperation. earlier this month, the bis was the site for the year 2000 round table sponsored jointly by the cpss, basle supervisors, the international organization of securities commissioners, and the

have been making adjustments in the wake of the financial crisis to innovations such as stress testing, a public process that in my view has helped make financial oversight more effective. the thoughts that i am airing in these remarks, part of a public process of discussion and debate, should be seen as a continuation of the review and adjustment that has been taking place since the financial crisis. the goal is to simplify rules that have grown more complex in the past decade and in some cases redundant and harder to understand. my second goal, in considering these adjustments, is to maintain the high level of loss - absorbing capacity in the u. s. banking system. our financial system today is far more resilient than it was before the crisis and i want to maintain that resiliency. we are all better served by wellcapitalized banks that have the ability to continue lending to households and businesses even during stressful times. adjusting regulation in measured ways, such as those i will describe, is an appropriate and, in fact, necessary way to preserve the success we have achieved in strengthening the financial system. before i delve into describing the future direction of our stress testing and capital frameworks, allow me to begin with some background on the origins of the stress testing program and an 1 / 5 bis central bankers'speeches overview of the changes we have made to our capital requirements since the financial crisis. background on the fed ’ s stress testing program at the height of the crisis, as a way to help restore confidence in the largest u. s. banks, the fed created the supervisory capital assessment program ( scap ) to estimate potential losses at those banks, if economic and financial conditions worsened. building on the success of scap, the board moved to the current stress testing assessment, known as the comprehensive capital analysis and review ( ccar ), to evaluate whether the largest firms have sufficient capital to continue to lend and absorb potential losses under severely adverse conditions. at the same time that we were building our stress testing program, we were also making changes to capital rules to address weaknesses observed during the crisis. these included new minimum capital requirements and a capital buffer on top of these requirements. the buffer puts increasingly strict and automatic limits on capital distributions as a bank ’ s capital declines toward the minimum. large banks are also subject to a potential countercyclical capital buffer ( ccyb ), which i will discuss more shortly. and the largest banks are subject to an additional buffer of capital based on a measure