supervisory colleges and crisis management groups for aig ( american international group, inc. ) and prudential. we continue to discuss supervisory plans and findings for the insurance firms, extend invitations for joint inspection activities, and discuss common areas of supervisory focus. as you likely know, the board is also working to develop a regulatory framework for its supervised insurance companies. the dodd - frank act authorizes the board to establish minimum capital requirements for both systemically important insurance companies and slhcs and bank holding companies predominantly engaged in insurance activities. for systemically important insurance companies, the dodd - frank act directs the board to establish enhanced prudential standards in order to mitigate risks to u. s. financial stability that could arise from the material distress, failure, or ongoing activities of these companies. the enhanced prudential standards must include, among other things, enhanced capital requirements, liquidity requirements, corporate governance and risk - management standards, and resolution planning requirements. we have already established resolution planning requirements for the systemically important firms. at present, we have three major regulatory initiatives underway for our supervised insurance firms : first, reporting requirements for the systemically important firms ; second, enhanced corporate governance, risk management, and liquidity standards for those same firms ; and third, capital requirements for all supervised insurance firms. let me say a few words about the first two and then spend the rest of my remarks on capital requirements, which i know are probably of the greatest interest. about a month ago, the federal reserve proposed new reporting requirements specifically for the systemically important insurance companies. 7 these reporting requirements are designed, among other things, to keep us informed as to the financial condition and risk profile of these firms, as well as the extent to which their activities and operations could pose a threat to the financial stability of the united states. the proposed reporting requirements differ substantially from reporting requirements for bank holding companies, and from available u. s. generally accepted accounting principles ( u. s. gaap ) financial information filed with the sec. they are highly tailored to the assets, liabilities, and risks of insurance companies. we look forward to receiving public comment on the proposal. regarding enhanced prudential standards, the federal reserve's enhanced corporate governance and risk - management standards for systemically important insurance companies will likely build on the core provisions of our consolidated supervisory framework for large domestic and foreign banking organizations, with appropriate adjustments to reflect these firms'predominantly insurance business model. 8 the framework will mandate standards for

spillover effects of the three rounds of tariffs have already been experienced by various asian economies, as we have seen exports slowing in a number of economies. here in hong kong re - export volumes destined for china or the us that are on the tariff lists fell in the fourth quarter of 2018. while we ’ re all hopeful that a resolution is on its way, we should also be prepared for further damage to businesses and confidence if the conflict continues to linger. another near - term risk is the recent shift in the stance of monetary policy in the advanced economies from tightening to accommodative. in principle, this could be beneficial to asian currencies and investor sentiments ; but it could also be the impetus to new rounds of capital flow “ surges - and - flights ”. it ’ s therefore imperative for our region to manage and allocate the surges efficiently with the view that there may be a potential reversal later on. turning to longer - term challenges, a key one for asia is adaptation to china ’ s ongoing economic transformation. we have already seen some economies in the region benefitting from this transformation in recent years, by stepping into certain manufacturing sectors that china has exited, while others have boosted participation in china ’ s value chain, especially in high - tech 1 / 4 bis central bankers'speeches sectors. the continued opening up of capital markets means that financial linkages between china and other asian economies will also become tighter. but amid this transition is the possibility that an economy ends up being left out because it didn ’ t adapt effectively. i ’ d imagine, for example, that economies overly dependent on exports geared toward filling china ’ s investment demand may lose out to those that focus on supplying consumption goods and providing financial services. so while i don ’ t see china ’ s economic transition leading to “ black swans ” for asian economies, the risk would be for economies to “ fall behind ” in the process. another longer - term challenge — and one that ’ s perhaps most important — is the chance that some economies in our region might fall into the so - called “ middle income trap ”. the middle income trap is the phenomenon that many emerging economies slow markedly as per capita income approaches a certain level, typically estimated to be around us $ 20, 000. many important economies in asia are already approaching that level, so we should all be thinking about this challenge before it ’ s too late. trends such as population ageing, a slowdown of urbanisation, low productivity