stress testing program is that the firms and the public receive an independent view of the capital adequacy of the largest banks. the results are based on our own models and provide a consistent yardstick to measure resiliency across the banking system. but the stress test conducted by the federal reserve is only one part of our stress testing regime. just as important, we require each firm to run its own stress test, using its own models and a stressful scenario that reflects the firm's assessment of its idiosyncratic risks and key vulnerabilities. underpinning a firm's stress test is the firm's ability to identify and measure risks under normal and stressful conditions and the strength of the firm's internal processes, and we use the supervisory process to ensure that the firms'stress testing practices employ sound methodologies. the combination of the federal reserve's common yardstick, the firm's own stress tests, and supervisory oversight over the firms'practices has resulted in a meaningful increase in the poststress resiliency of large financial institutions. all of these core components will remain in place. further, the changes i'll speak about today are not intended to alter materially the overall level of 1 / 6 bis central bankers'speeches capital in the system or the stringency of the regime. a healthy u. s. economy relies on a strong, well - capitalized banking system that can weather stressful events and continue lending to households and businesses. the u. s. banking organizations subject to the 2018 comprehensive capital analysis and review ( ccar ) - - the fed's evaluation of capital adequacy for large holding companies - - have increased the dollar amount of their common equity tier 1 ( cet1 ) capital from around $ 500 billion in 2009 to more than $ 1. 2 trillion as of the second quarter of this year, and have more than doubled cet1 risk - based capital ratios from approximately 5 percent to over 12 percent over the same period. while the regime has been successful overall, i believe it is prudent to review all our practices to ensure that they are as efficient and transparent as possible and that they remain appropriate in light of changes in the industry that have been achieved. for instance, as firms become more resilient, they may no longer need to build capital to support their current level of risk taking, but rather move into the mode of retaining the capital they have already built. firms have

t t mboweni : monetary policy and inflation address by mr t t mboweni, governor of the south african reserve bank, at the bureau for economic research annual conference, cape town, 7 november 2002. the references for the speech can be found on the website of the south african reserve bank. * 1. * * introduction there has been a widespread shift among central banks toward a more focused approach regarding inflation since the early 1990s. countries have increasingly been granting independence to their central banks with a first policy priority being low inflation. there is general consensus that high inflation is associated with bad economic performance and there is recognition by central bankers that policies aimed at systematically exploiting the short - run output / inflation trade - off to increase output beyond potential are in the long - run always ineffective and self - defeating. there seems to be continued uncertainty in some circles as to the reserve bank's primary objective. i have mentioned the bank's primary objective many times before but it seems to need regular restatement. according to the constitution " the primary objective of the bank shall be to protect the value of the currency of the republic in the interest of balanced and sustainable economic growth ". by working towards keeping domestic inflation low, stable, and predictable, the bank contributes towards solid, sustainable economic growth and a higher standard of living for the community. the autonomy and objectives of the bank are entrenched in the constitution that specifies that the bank, in pursuit of its primary objective, must perform its functions independently and without fear, favour or prejudice. the bank has interpreted this constitutional reason for its existence to mean that it must always strive to achieve and maintain price stability in south africa. in the pursuance of this objective, the bank assumes responsibility for, firstly, formulating and implementing monetary policy in such a way that the primary objective will be achieved in the interest of the whole community that it serves. secondly, ensuring that the south african money and banking system as a whole is sound, meets the requirements of the community and keeps abreast of developments in international finance. thirdly, assisting the south african government, as well as other members of the economic community of southern africa, in the formulation and implementation of macroeconomic policy. and fourthly, informing the south african community and all interested stakeholders abroad about monetary policy specifically, and the south african economic situation in general. in order to avoid global financial crises and the risk of contagion, the international community has been working hard to promote good