has been agreed upon. first, banks whose failure would pose a risk to the global financial system will face a capital surcharge. this framework has also been extended to domestic banks. here in canada, our six largest banks have been designated as domestic systemically important banks by the office of the superintendent of financial institutions. and in quebec, the autorite des marches financiers has designated desjardins as a domestic systemically important financial institution. all seven are required to hold 1 per cent more capital. second, standards, known as the “ key attributes, ” have been established for the effective resolution of financial institutions. under the key attributes, bondholders, shareholders and management – rather than taxpayers – will have to bear the brunt of losses. third, systemically important institutions are facing more intense and more effective supervisory oversight. this includes recovery and resolution plans, a cross - border cooperation agreement between relevant authorities, and a resolvability assessment. work is also well advanced to extend this framework to other systemic financial firms, including global insurance companies, non - banks and core financial market infrastructure. on shadow banking, the goal is to transform it from a source of vulnerability to a source of market - based finance that adds competition, diversity and resilience to the financial system. here, too, we have made good progress. at the most recent g - 20 summit in st. petersburg this past september, the leaders endorsed a set of recommendations to increase transparency, reduce moral hazard, and limit maturity and liquidity transformation. finally, on strengthening the resilience of core financial markets, more than half of the fsb ’ s member jurisdictions now have legislative frameworks in place to ensure that derivatives bis central bankers ’ speeches transactions are reported to trade repositories ; that standardized over - the - counter ( otc ) derivatives are cleared through central counterparties ; and that non - centrally - cleared derivatives have higher capital and margin requirements. there is more, but i want to turn to the four issues that deserve particular attention. leverage limits in an ideal world, regulators would accurately measure the riskiness of bank assets when setting capital requirements. but risks, of course, are not known with certainty nor can they be measured with precision. as a complement to the risk - based capital framework, a simple, but effective, leverage ratio was therefore imported from canada into the global standard. this leverage ratio sets a cap on the value of the assets a bank can hold for each dollar

* * projected range from the bank of canada ’ s april 2020 monetary policy report statistics canada and bank of canada projections gdp last data plotted : 2022q4 these possible outcomes reflected two distinct dynamics. some economic activity and employment would return to normal levels as soon as the pandemic subsided and lockdowns were lifted — similar to what often happens following a natural disaster. other economic activity would take longer to come back. indeed, in the spring of 2020 economists around the world debated about whether the recovery would be v - shaped or l - shaped. the bank ’ s view was that each of these dynamics would likely play out in turn, resulting in a two - phased recovery : first reopening and then recuperation. why did we expect full recuperation to take longer? it was partly because of our experience with the global financial crisis of 2008 – 09. the long, drawn - out recovery that followed that crisis reflected a large and prolonged rise in unemployment and massive damage to balance sheets. as a result, the global economy took 10 years to recover to its pre - crisis trend. labour markets can be damaged by lengthy recessions. unemployment can have persistent effects on people ’ s skills and their ability to re - enter the workforce. because the pandemic began with such a huge increase in unemployment and so much uncertainty around how long the pandemic would last, this concern was front of mind. the unevenness of job losses caused by the pandemic also suggested that inequality could widen, which itself has negative economic consequences. in all, we saw powerful downdrafts on the economy in those early months — reflected in our expectation that it would take until 2023 for slack to be absorbed. the same view was evident in our projection for inflation at the time. we can see in chart 5 that our earlier projection showed inflation creeping up to our 2 % target over three years. chart 5 : consumer price index inflation, projected versus actual year - over - year percentage change, quarterly data, not seasonally adjusted % - 1 projected cpi inflation * actual cpi inflation * projected cpi inflation from the bank of canada ’ s july 2020 monetary policy report sources : statistics canada and bank of canada projections last data plotted : 2022q4 needless to say, this is not exactly how things turned out. the economy ’ s path of recovery has followed the upper edge of the range we had contemplated. employment recovered more quickly than expected. and inflation persistently ran much higher than