from further refinement. accordingly, i expect we will adopt a final rule in the near future that will settle the basic framework of the scb, but re - propose certain elements. to enable this process to run its course, i expect that the first scb would not go into effect before 2020. for 2019, i expect ccar will remain in place for firms with over $ 250 billion in assets or that are otherwise complex ; however, we will consider whether we can move forward with any aspects of the scb proposal for ccar 2019, such as assumptions related to balance sheet growth. i will also ask the board to exempt firms with less than $ 250 billion in assets from 2 / 6 bis central bankers'speeches the ccar quantitative assessment and supervisory stress testing in 2019 in light of the everyother - year cycle contemplated in the tailoring proposal that the board approved two weeks ago. 2 returning to the scb proposal, i would like to give you a sense of the comments we received and our approach to addressing those concerns. the issue foremost on my mind is the volatility of the stress test results. one concern frequently expressed is that the results of the supervisory stress test can lead to capital requirements that change significantly from year to year, which limits a firm's ability to manage its capital effectively. some amount of volatility is necessary to preserve the dynamism of the stress test - - by nature, the stress test will differ year - over - year based on macroeconomic conditions and contemporary understanding of salient risks in the economy. in addition, the stress test results are sensitive to changes in a firm's balance sheet, which means that a firm's capital requirements will evolve as the firm's activities and exposure evolve. however, i do think there is an important balance to be struck between preserving this dynamism and ensuring that firms have sufficient notice regarding the capital requirements to which they are held. in the first years after the financial crisis, as the banking system was dramatically ramping up the total amount of capital in the system, this volatility was less of a management problem : until we reached reasonably full capitalization, each year every bank needed to increase its capital. if one year that increment was a little higher or a little lower than the previous year, that was simply a modest difference of velocity, not direction. at the current juncture, however, both our system as a whole and each of the largest banks in

own stress tests. we expect them to make good on that representation, as the federal reserve's stress test is not, and cannot be, a full picture of a firm's resiliency in light of its idiosyncratic risks. for example, there is some risk that firms will use knowledge from additional transparency about the stress test to engage in transactions that are solely designed to reduce losses in the test, but that do not truly reduce risk in their portfolios. as supervisors, however, this is something that we can guard against through the regular examination process. we will closely monitor changes in firms'portfolios and take appropriate actions to ensure firms are holding sufficient capital, and have sufficient controls and governance, in light of the risk characteristics of their activities. qualitative objection before i close, i would like to say a few words about the role of the qualitative objection in our new chapter of stress testing. as originally conceived, ccar had both a quantitative component - based on the supervisory stress test - - and a qualitative component - - based on the federal reserve's assessment of a firm's stress testing practices. in 2017, the federal reserve eliminated the qualitative objection as part of ccar for large and noncomplex firms, in part because of improvements in risk management at these firms. 3 by incorporating supervisory stress testing into the regulatory capital regime and introducing an automatic penalty if a firm falls below its scb - derived capital requirement, the scb proposal will eliminate the quantitative objection from ccar. the natural next question is : has the ccar qualitative objection for the largest firms also run its course? in my view, the time has come to normalize the ccar qualitative assessment by removing the public objection tool, and continuing to evaluate firms'stress testing practices through normal supervision. in such an environment, firms would remain subject to the same supervisory expectations, and examiners would continue to conduct rigorous horizontal and firm - specific assessments of a firm's capital positions and capital planning, tailored to the risk profile of the firm. while much of the examination work would center on a firm's capital plan submissions, examination work would continue on a year - round basis, taking into account the firm's management of other financial risks. the evaluation of the firm's capital position and capital planning would culminate in a rating of the firm's capital position and planning. firms with deficient practices would receive supervisory findings