of a single interpretation, and the implementation of those provisions will require the exercise of discretion by the federal reserve or other regulatory agencies. i can also say that we are following a transparent and inclusive process that goes well beyond the classic notice and comment requirements for agencies adopting regulations. as to transparency : at the federal reserve, we are entering into the public record a summary of all communications with non - government groups or individuals regarding matters subject to a potential or proposed rulemaking under dodd - frank. as to inclusiveness : we have joined with the other banking agencies in sponsoring a series of joint forums to solicit views from industry, academics, and others on some key issues relevant to dodd - frank implementation. we are also hearing views on regulatory implementation at meetings that cover a broad range of topics, such as at our last consumer advisory council session. reforming minimum capital requirements although they had long used bank capital ratios as a supervisory tool, u. s. bank regulators did not impose explicit minimum capital requirements until the 1980s. the proximate reason for this change was regulatory concern over the decline in capital ratios of the largest banks – a concern reinforced by congress, as it saw some of those large banks facing enormous losses on their loans to foreign sovereigns. this u. s. regulatory innovation was effectively internationalized a few years later in the original basel accord. at the same time, regulators came to regard capital requirements as a supple prudential tool. as activity and affiliation restrictions were loosened in the united states, capital requirements seemed a promising way to protect the public ’ s interest in the stability of financial institutions that had access to the federal reserve ’ s discount window and federal deposit insurance corporation insurance. capital requirements promised to provide a buffer against bank losses from any activities in which the bank or its affiliates might engage, a consideration of equal or greater relevance in countries with universal banking models. some support also developed for the proposition that minimum capital levels could, by maintaining a material equity value for the bank, serve as a disincentive for excessive risk - taking by management and shareholders. in the ensuing quarter century, the attention of banking regulators around the world had been heavily oriented toward elaborating capital requirements to reflect more precisely the particular risks faced by a financial institution. capital requirements had, to a considerable extent, become the dominant prudential regulatory tool. the financial crisis showed that the concentrated, almost all - consuming regulatory focus on refining bank capital requirements in basel ii had come at the expense

lael brainard : the " new normal " and what it means for monetary policy speech by ms lael brainard, member of the board of governors of the federal reserve system, at the chicago council on global affairs, chicago, illinois, 12 september 2016. * * * in the months ahead, my colleagues and i will continue to assess what policy path will best promote the sustained attainment of our goals. with that in mind, i would like to start by describing the contours of today ’ s economy that will be particularly important in shaping the appropriate path of policy before reviewing recent developments. these contours represent noteworthy departures from the “ old normal ” that prevailed in the decades prior to the financial crisis. i would argue that policy today must rely less on the old normal as a guidepost and instead be sensitive to the contours that shape today ’ s “ new normal. " 1 key features of the “ new normal " because monetary policy is forward looking, policymakers must assess how key features of the economic environment are most likely to influence the future path of the economy and shape policy accordingly. at a time when our assessment of the economy is evolving, several features of the “ new normal " — some of which are interrelated — appear particularly noteworthy for our policy deliberations : 1. inflation has been undershooting, and the phillips curve has flattened first, for the past several decades, policymakers relied on the empirical relationship between unemployment and inflation embodied in the phillips curve as a key guidepost for monetary policy. the phillips curve implied that as labor market slack diminished and the economy approached full employment, upward pressure on inflation would result. however, since 2012, inflation has tended to change relatively little — both absolutely and relative to earlier decades — as the unemployment rate has fallen considerably. 2 at a time when the unemployment rate has fallen from 8. 2 percent to 4. 9 percent, inflation has undershot our 2 percent target now for 51 straight months. 3 in other words, the phillips curve appears to be flatter today than it was previously. with the phillips curve appearing to be a less reliable guidepost than it has been in the past, the anchoring role of inflation expectations remains critically important. on expected, similar to realized, inflation, recent developments suggest some reasons to be concerned more about undershooting than overshooting. although some survey measures have remained well anchored at 2 percent, consumer surveys have moved to the lower end of their historical