two new liquidity ratios to mitigate liquidity risk. bis central bankers ’ speeches introduced a new leverage ratio to limit leverage and reinforce risk - based requirements. developed a large - exposures framework to limit the maximum loss in case of counterparty ’ s failure. last, but not least, the basel committee has improved the effectiveness of supervision by upgrading its core principles and by strengthening the supervision of systemically important banks. many of these new rules are now in place and we can say that banks are more resilient now than in 2009. but different weaknesses persist. for this reason, the basel committee is undertaking a review of the capital framework that will be finalised by the end of 2016. in particular, the methodologies used to measure banks ’ risks are being reviewed, both under the standardised approaches and under internal models. the standardised approaches are being revised to incorporate the lessons learned from the crisis so as to increase their risk sensitivity without, however, making them unduly complex. regarding the internal models, they have been criticised because of their lack of comparability, the variability of the resulting risk - weighted assets, and their complexity and lack of transparency. these, let ’ s say, “ faults ” have undermined the credibility of capital ratios. therefore, the basel committee is considering including several constraints on internal models in order to strike a better balance between simplicity, comparability and risk sensitivity. the other remaining major challenge is calibration. basel iii has changed the prudential setting quite significantly. the days when there was a single metric ( the risk - weighted capital ratio ) are over. we now have several prudential measures that will most probably be interacting in different ways. banks will have to comply with a risk - weighted capital ratio ( including additional buffers ) ; a leverage ratio ; two liquidity ratios and the large exposure limits. additionally, banks that apply internal models will most likely face capital floors based on standardised approaches. finally, some systemic banks will have to hold additional capital to meet global - systemically - important - bank ( gsib ) buffer and total - loss - absorbingcapacity ( tlac ) requirements. applying different metrics will make the framework more resilient because some metrics will avoid the limitations of others. for instance, floors based on standardised approaches are meant to be a kind of control or safeguard on internal model risk calculations. therefore, during 2016 the basel committee will be quite busy deciding on the

economy can succeed without a high - quality see, for example, james m. poterba ( 1995 ), “ balanced budget rules and fiscal policy : evidence from the states, ” national tax journal, vol. 48 ( 3 ), pp. 329 – 36. see richard mattoon and leslie mcgranahan ( 2008 ), “ revenue bubbles and structural deficits : what ’ s a state to do? ” working paper no. 2008 – 15 ( chicago : federal reserve bank of chicago, july ) ; and david l. sjoquist and sally wallace ( 2003 ), “ capital gains : its recent, varied, and growing (? ) impact on state revenues, ” state tax notes, august 18. bis central bankers ’ speeches workforce, particularly in an age of globalization and technical change. cost - effective k - 12 and post - secondary schooling are crucial to building a better workforce, but they are only part of the story. research increasingly has shown the benefits of early childhood education and efforts to promote the lifelong acquisition of skills for both individuals and the economy as a whole. the payoffs of early childhood programs can be especially high. 7 for instance, preschool programs for disadvantaged children have been shown to increase high school graduation rates. 8 because high school graduates have higher earnings, pay more taxes, and are less likely to use public health programs, investing in such programs can pay off even from the narrow perspective of state budgets ; of course, the returns to the overall economy and to the individuals themselves are much greater. additionally, in a dynamic economy in which job requirements are evolving more rapidly than ever, individuals already in the workforce need opportunities to improve their skills throughout their lives. there are many ways to provide such opportunities. for example, community colleges and vocational schools train and retrain workers, often in close collaboration with private employers, and in many cases they perform this function at a relatively low cost. although helping workers acquire up - to - date skills is always important, it is especially critical now, when long spells of unemployment are threatening the longer - term employability and productivity of many. conclusion tonight i have highlighted some of the fiscal challenges faced by elected officials, both in new york and in other regions. in the past few years, the weak economy has significantly reduced government revenues, which in turn has forced governments to make difficult decisions on spending and taxes. an improving economy should help, but state and local finances will remain under pressure for some time. moreover, states and localities