the ratings framework that applies to all large holding companies. a firm ’ s supervisory rating, which is confidential, is important because it affects things such as the firm ’ s ability to engage in mergers and acquisitions and to enter new lines of business. just over a year ago, the board began implementing a new ratings framework for large holding companies called the large financial institutions ( lfi ) ratings framework. the lfi ratings framework focuses on three components of a firm ’ s operations : capital, liquidity, and governance and controls. we inaugurated the lfi ratings framework for liscc firms in january 2019 and for other large holding companies at the beginning of this year. as we gain more experience with lfi, we will be paying close attention to how the new rating system is working and whether it is achieving its intended purpose. there are two features of the ratings system that i will be particularly interested to monitor, and which may well require adjustment. these are the embedding of qualitative “ risk management ” standards in the capital and liquidity components of the ratings ( as opposed to standardized quantitative measures of capital and liquidity adequacy ) and the ascetic principle by which a firm ’ s “ well managed ” status is determined by its lowest component rating, no matter how good the bank is at everything else. regarding our stress tests under the comprehensive capital analysis and review ( ccar ), i 4 / 7 bis central bankers'speeches continue to look for ways to make the tests more transparent without making them game - able and without diluting their potency as a supervisory tool. i will mention three of these transparencyenhancing ideas. first, i expect that we will continue to provide more transparency on the models used in ccar. we started providing improved transparency on models last year, and as i have previously said, we will remain on that path until we have released substantial details on all of our key models. we also continue to consider ways to increase the transparency around the scenarios we use in ccar, including, for example, by modifying our scenario design policy statement to provide greater transparency on the design of the global market shock component of the stress tests. second, i expect that as part of the stress capital buffer, we will give banks significantly more time to review their stress test results and understand their capital requirements before we demand their final capital plan. firms are currently permitted to revise and resubmit their capital plans after receiving their stress test results. but it

our assumptions about future growth prudently, but also to maximise our efforts in those areas that can lift potential growth. this is not just an academic debate about “ reform ” among “ elite ” opinion. it's not just about what a response might be to some theoretical future slowing of growth in living standards. slower growth is here now and has been for a while. it's surely no coincidence that the path back to budget balance is turning out to be a very long one. at present, very low nominal gdp growth looms large in subduing revenue growth, because of the terms of trade decline. but when the terms of trade stabilise, weaker potential real growth per head of population will still be a problem. many difficult choices will need to be made along the path of budgetary adjustment. at present, general public debate starts with commitment to the need for reform and for putting public finances on a sustainable medium - term track. but when specific ideas are proposed that will actually make a difference over the medium to long term, the conversation quickly shifts to rather narrow notions of “ fairness ”, people look to their own positions, the interest groups all come out and the specific proposals often run into the sand. if we think this rather other - worldly discussion will not have to give way to a more hard - nosed conversation, we are kidding ourselves. that will occur should there be a moment of crisis, but it would be better if it occurred before then. in addition, and this may complicate the fiscal discussion, we can't just assume that monetary policy can simply dial up the growth we need. we need some realism here. through a combination of extraordinary circumstances, the central banking community globally has found itself doing unprecedented things. we in australia have done fewer such things, but we are connected to the world, and the effects of policies adopted elsewhere condition the policy choices available to us. although we have not implemented “ unconventional policies ”, we nonetheless have interest rates at levels lower than any of us have seen before in our lifetimes. moreover, the “ return to normal ” at the global level looks like being a very, very slow process. and normal is a different place now. as would be clear from my utterances over the past couple of years, i have serious reservations about the extent of reliance on monetary policy around the world. it isn't that the central banks were wrong to do what they could, it is that what they could do