conference, you will be discussing a few key ongoing regulatory capital initiatives, focusing on the completion of the basel iii reforms. as vice chair for supervision michael barr has noted, finalizing the basel iii reforms is a high priority for the federal reserve. the revised framework should improve the resilience of the banking system by producing more robust and internationally consistent capital requirements for large firms, building on improvements made to the capital framework following the global financial crisis. importantly, the revised framework is expected to reduce unwarranted variability in capital requirements. by increasing standardization, these reforms aim to increase transparency and public confidence in risk - weighted assets while also reducing complexity. as we speak, the staffs of the u. s. federal banking agencies are diligently working on a basel iii endgame proposal that should be issued for public comment soon. at the same time, the federal reserve staff is considering ways to enhance the ability of stress tests to capture a wider range of risks and identify vulnerabilities at the largest banking organizations. conclusion based on this brief overview of the issues, this afternoon promises to be invigorating and informative. i look forward to hearing how the panel discussions go. i hope that you enjoy the conference. thank you. 4 / 4 bis - central bankers'speeches

global dimension to inflation, which is currently low and falling across a wide range of advanced economies. 8 a convenient way to look at this is by using factor analysis, a statistical method that summarizes the common variability among the inflation rates of different countries. when we look at the evolution of global inflation, as measured by this common factor, we see a decline in global inflation since 2012 ( chart 6 ). 9 global total inflation is strongly correlated with global energy and food price inflation – the corresponding correlation coefficients are 0. 5 and 0. 6, respectively. this suggests that much of the recent decline in global total inflation can be explained by the recent fall in world energy and food prices ( chart 7 ). however, longer - term trends are more likely a reflection of movements in global core inflation. the recent decline in global core inflation is more difficult to understand ( chart 8 ). it may reflect the large and persistent amount of economic slack in many advanced countries ( chart 9 ). 10 however, it is less apparent how economic slack can explain why disinflation is occurring now, since core inflation was relatively stable from 2009 to 2011, when the output gaps in most countries were even larger. it may be that the sensitivity of inflation to the output gap increases as the gap becomes more persistent, and this could be reinforced by changes in inflation expectations. inter alia m. ciccarelli and b. mojon, “ global inflation, ” the review of economics and statistics 92, no. 3 ( 2010 ) : 524 – 35. for international comparability, core inflation is defined here as consumer price inflation minus food and energy. still, there are differences across countries with regard to the components that enter the measurement of consumer prices. the charts show standardized inflation rates, whereby all inflation rates have a mean of zero and a standard deviation of one. some have argued that increasing trade with china has helped to keep inflation low. while this has been confirmed empirically ( l. morel, “ the direct effect of china on canadian consumer prices : an empirical assessment, ” bank of canada discussion paper no. 2007 – 10 ; d. cote and c. de resende, “ globalization and inflation : the role of china, ” bank of canada working paper no. 2008 – 35 ), the overall effect seems to be quantitatively small, and it has become even less important recently, since chinese prices are no longer falling and china ’ s market share of imports to advanced economies is