of global standards combined with the common basis of the rules – since the uk transposed eu rules from the outset – would be enough to base equivalence on global standards. less than this was enough when canada, the us, australia, hong kong and brazil were all deemed equivalent. continuing with the example of central clearing, the eu has recently made the us sec equivalent for ccps, subject to certain conditions. these conditions are already met by uk ccps as they are a legal requirement in the onshored legislation, but equivalence beyond the temporary extension remains uncertain. the eu has argued it must better understand how the uk intends to amend or alter the rules going forwards. this is a standard that the eu holds no other country to and would, i suspect, not agree to be held to itself. it is hard to see beyond one of two ways of interpreting this statement, 2 / 4 bis central bankers'speeches neither of which stands up to much scrutiny. the first interpretation is that the rules should not change in the future, and to do so would be unwelcome. this is unrealistic, dangerous and inconsistent with practice. as the world around us changes, so must the rules to accommodate these changes. as evidence of this, look at what the authorities have had to do in response to covid and the shock that created for financial markets. the eu is almost constantly revising, or contemplating revising its own rules, and that ’ s a good thing. so, i dismiss this argument. the second argument is that uk rules should not change independently of those in the eu. i am being careful to phrase this point. it ’ s not that uk rules might change independently – the equivalence process provides for re - assessment of such decisions, so this should not be a problem. so, it must be the stronger form that they should not change independently. but that is rule - taking pure and simple. it is not acceptable when uk rules govern a system 10 times the size of the uk gdp and is not the test up to now to assess equivalence. it ’ s worth considering why we would choose to change the rules. first, it would be rare to say the least if such rules turn out always to work perfectly first time and thus need no amendment. as an example of this, the eu itself is looking to amend mifid2 to iron out areas that need further work. second, as the world moves on, so the rules need to adapt. if they do

lael brainard : modernizing and strengthening cra regulations - a conversation with the consumer bankers association speech by ms lael brainard, member of the board of governors of the federal reserve system, at the consumer bankers association community reinvestment act committee meeting, 17 december 2020. * * * good afternoon and thank you for inviting me to take part in the consumer bankers association ’ s ( cba ’ s ) community reinvestment act ( cra ) committee meeting. the cra officers and teams at your institutions play an important role in identifying community priorities and building partnerships with stakeholders to implement effective cra programs. we appreciate the opportunity to hear feedback from cba members and this committee reflecting your extensive experience making loans and investments to support local communities. 1 the federal reserve issued an advance notice of proposed rulemaking ( anpr ) on cra modernization earlier this fall. 2 the anpr seeks to strengthen the regulation in alignment with the cra statute, and the discussion in the anpr recognizes the historical context of redlining and racial discrimination prior to the cra ’ s enactment in 1977. we believe that the cra remains an important tool to promote economic and financial inclusion, and we have specifically asked for feedback about what modifications and approaches would strengthen cra regulatory implementation in addressing ongoing systemic inequity in credit access for minority individuals and communities. we also recognize the need to update the regulation to reflect the changes that have happened in the banking industry over time. in addition, the anpr reflects other key objectives like providing greater consistency and transparency in cra examinations, effectively tailoring regulations, and minimizing data burden. we ’ re looking forward to feedback on these big - picture questions and objectives in addition to the specific proposals discussed in the anpr. many of the ideas in the anpr reflect interagency discussions, and our hope is that the anpr provides a foundation for the agencies to converge on a consistent approach to cra modernization that also has strong stakeholder support. let me take a minute to highlight some of the key proposals addressed in the anpr. first, we propose a cra evaluation framework that incorporates the use of metrics and tailored standards that take into account differences across local communities and reflect differences in bank size and business model. we heard feedback about the importance of separately evaluating retail and community development activities in order to capture the distinct importance of each type of activity in meeting community needs. therefore, the anpr proposes that large retail banks would be