to inform their capital distribution plans, and we will continue to use the supervisory process to reinforce this expectation. the third is the post - stress leverage requirement. as the federal reserve has long maintained, leverage requirements are intended to serve as a backstop to the risk - based capital requirements. by definition, they are not intended to be risk - sensitive. thus, i am concerned that explicitly assigning a leverage buffer requirement to a firm on the basis of risk - sensitive poststress estimates runs afoul of the intellectual underpinnings of the leverage ratio, and i would advocate removing this element of the stress capital buffer regime. of course, leverage ratios, including the enhanced supplementary leverage requirements, would remain a critical part of our regulatory capital regime, and we will maintain the supervisory expectation that firms have sufficient capital to meet all minimum regulatory requirements. to give these issues the careful consideration they deserve, i expect we will adopt a final rule in the near future, settling the basic scb framework while re - proposing certain elements. i expect that the first scb would not go into effect before 2020, and that ccar will remain in place in 2019 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, and i will ask the board to exempt firms with less than $ 250 billion in assets from the ccar quantitative assessment and supervisory stress testing in 2019. transparency in the meantime, several initiatives are also underway to provide additional transparency into stress testing. i expect you will soon see the federal reserve issue a policy statement describing governing principles around the supervisory stress testing process — and with it, a commitment to disclosing additional detail about supervisory stress test models and results, along with portfolios of hypothetical loans and associated loss rates. i expect we will begin providing some of this additional detail starting in early 2019. i also expect the board will seek comment on the advisability of, and possible approaches to, gathering public input on scenarios and salient risks facing the banking system each year. transparency matters not only because it provides additional due process to affected participants ; it also creates an opportunity for broader, more insightful comments from the public. as a result, it can allow us to be more nimble and better informed in our scenario design. however, we want to maintain incentives for firms to conduct their own stress tests rigorous

periods of destruction of the same. the financial system has come a long way since the time of emperor tiberius. while we have relearned some familiar lessons in recent years, we have also learned some new ones. we have had to develop a new regulatory framework, macroprudential institutions like the fpc and new policy approaches. over the next few years we will certainly need to refine all of these. the implementation of the detailed reforms will inevitably throw up unforeseen effects in particular places and where it is justified we will need to revisit issues. but we should be careful about talking about turning back the overall regulatory dial or trying to trade off the risk of financial instability for short term growth. bis central bankers ’ speeches