international standard - setters are not automatically legally binding in the united states. they do not go into effect unless they are adopted by a u. s. authority acting under u. s. laws following an administrative process. they are also subject to a period of public notice and comment. when appropriate, u. s. authorities have adopted different standards than those proposed in international forums. finally, following the financial crisis, the federal reserve developed a capital stress testing supervisory program — known as the comprehensive capital analysis and review ( ccar ). ccar has become an integral part of ensuring appropriate capital levels. by imposing a discipline of forward - looking capital assessment on our largest firms, ccar helps protect the safety and soundness of the largest financial institutions — and therefore the stability of the entire financial system. the ccar process consists of two parts. first, the quantitative assessment evaluates whether a firm holds a sufficiently large capital buffer so that it can continue to be a viable financial 3 / 6 bis central bankers'speeches intermediary even in a stressed market and macroeconomic environment. second, the qualitative assessment evaluates whether the firm ’ s risk management and capital planning processes are well - developed and well - governed. ccar has helped to strengthen the capital levels of the largest financial institutions, and has pushed these firms to steadily improve their risk management and capital planning processes. while appropriate capital and liquidity standards are necessary, they must be augmented by a supervisory regime that can assure the quality of a firm ’ s governance, controls, risk culture and compliance with applicable laws and regulations. as we saw with jpmorgan chase in the “ london whale ” episode and with wells fargo more recently, effective risk management and governance is a necessary complement to having adequate capital and liquidity buffers. resolution we also must have an effective resolution mechanism that allows a firm to fail without threatening to bring down the entire financial system. we are not quite there yet — given some of the challenges in executing resolution on a cross - border basis — but we have made significant progress. in particular, i would point to two developments that are especially important. the fdic and the federal reserve have used the authority provided by title i of the dodd - frank act to oversee the so - called “ living will ” process — the resolution planning that large financial firms must do as a contingency for their potential failure. developing living wills necessitates that firms and regulators consider, in advance, how bankruptcy can serve as

. why do we do this? why is it important to generate insights about individual workers rather than relying just on analysis of the aggregate data? the first, and most obvious, point is that the aggregate masks the experiences of individuals. not all workers and consumers experience the economy in the same way. employment, wage and income growth, housing, education, credit and a host of other outcomes vary significantly across different cohorts of individuals and these differences in turn can vary over the business cycle. to understand important economic concepts like full employment, financial security, productivity growth and the impact of education, it is vital to understand not just the average experience but rather how all cohorts of the population are faring. this understanding is important in and of itself, especially in evaluating the impact of critical trends affecting the economy, like technological innovation or demographics, as well as the policies intended to respond to the impacts of those trends. we cannot fully understand whether policies have improved social welfare unless we understand how the impact of those policies varies across individuals. but understanding heterogeneity is important even if we are just examining policy impact in the 1 / 2 bis central bankers'speeches aggregate. the most innovative macroeconomic models, those at the frontier of current economic work, recognize heterogeneity across consumers in assessing how monetary and fiscal policy changes are transmitted through the economy. these models incorporate individuals with different marginal propensities to consume, with different amounts of wealth or access to borrowing, or who face different risk exposures, such as the chance they become unemployed, over the business cycle. incorporating these factors can yield quite distinct insights about how changes in monetary or fiscal policy can affect growth, employment, wages and inflation. for those who want to know more, we published a blog post on monday of last week that describes the output of just such a model. regardless of the specific details, the key is that differences across individuals can be important for understanding how the economy works, even in the aggregate. for all these reasons, the research group at the new york fed is committed to continue our work on heterogeneity, across several dimensions of what we do. we are always looking for ways to expand and deepen our knowledge, to enhance the data that is available to our economists and others to do deep, sophisticated research on these topics, and, critically, to publish the work so that we are adding to the store of knowledge both among academic researchers and among policymakers. we are well