, an enhanced stress testing transparency package was released for public comment last month. i personally believe that our stress testing disclosures can go further. i appreciate the risks to the financial system of the industry converging on the federal reserve ’ s stress testing model too completely, so i am hesitant to support complete disclosure of our models for that reason. however, i believe that the disclosure we have provided does not go far enough to provide visibility into the supervisory models that often deliver a firm ’ s binding capital constraint. it is important in any proposal to receive comments, and i can say that i and my colleagues on the board will be paying particularly close attention to your comments on how we might improve this current proposal. concluding remarks to conclude, i hope that these remarks give you a sense of our approach to analyzing and improving post - crisis regulation. as i mentioned earlier, the areas of core reform — capital, liquidity, stress testing, and resolution — have produced a stronger and more resilient system and should be preserved. we have made great progress, but there is further work to do. some clear improvements are in the offing in the relatively near future. other areas will benefit from longer term discussion. i look forward to engaging with you and the public more broadly as i help to chart a course for the important work ahead. the views i express here are my own and not necessarily those of the board of governors of the federal reserve system. 4 / 5 bis central bankers'speeches 2 jerome h. powell, “ relationship between regulation and economic growth, ” ( testimony before the committee on banking, housing, and urban affairs, u. s. senate, june 22, 2017 ). 3 see board of governors of the federal reserve system, “ agencies propose simplifying regulatory capital rules, ” news release, september 27, 2017. 4 see board of governors of the federal reserve system, “ agencies extend next resolution plan filing deadline for certain domestic and foreign banks, ” news release, september 28, 2017. 5 see board of governors of the federal reserve system, “ federal reserve board requests comment on package of proposals that would increase the transparency of its stress testing program, ” news release, december 7, 2017. 5 / 5 bis central bankers'speeches

in the requirements for both the improved quality and increased quantity of capital in somewhat backloaded stages beginning in january 2013. questions have arisen – particularly here in the united states, though elsewhere as well – as to supervisory expectations for capital levels during this rather lengthy period. specifically, there has been some uncertainty as to whether supervisors intend to “ pull forward ” the various transition points outlined in basel iii. while the federal reserve intends to ensure that firms are on a steady path to full basel iii compliance, we do not intend to require firms to raise external capital or reduce their riskweighted assets in order to meet any target earlier than at the time specified in the basel iii transition schedule. however, because this issue is complicated somewhat both by certain expectations stated in basel iii and by the relationship of basel iii implementation to the federal reserve ’ s requirement for annual capital planning by certain large bank holding companies, i think it may be useful to provide some further details on our expectations. in the first place, the federal reserve will require bank holding companies that are subject to our proposed capital plan rule ( generally companies with $ 50 billion or more in total assets ) to take affirmative steps to improve capital ratios, such as external capital raises, when those steps would be needed to meet each basel iii transition target on time. next, i would remind everyone of a statement made by the governors and heads of supervision ( ghos ) – the oversight body of the basel committee – in announcing agreement on basel iii in september 2010. the ghos said that banks should “ maintain prudent earnings retention policies ” so as to meet both the new minimum equity standard and the conservation buffer “ as soon as reasonably possible. ” 2 in the spirit of that statement, we will expect large bank holding companies that have not yet met the fully phased - in basel iii requirements ( including any expected g - sib capital surcharge ) to improve their capital ratios steadily during the transition period through prudent earnings retention policies, even if they already meet any applicable intermediate targets. in practical terms, we will monitor their progress through our review of the capital plans that we require large bank holding companies to submit annually. that is, we will be comfortable with proposed capital distributions only when we are convinced they are consistent with a bank holding company basel committee on banking supervision ( 2011 ), progress report on basel iii implementation ( bank for international settlements : basel, switzerland, october ). see bank for international settlements ( 2010 ), “ group of governors and heads