and under the constraints of a fast - moving market event, we conducted and published a “ sensitivity analysis, ” examining how institutions would fare in a prolonged downturn. the banking system remained well capitalized in the downside scenarios we examined. but in light of continuing uncertainty, we took several steps to preserve bank capital — and with it, banks ’ role as a source of economic strength. 10 we are conducting a second round of stress tests toward that same goal, with results announced before the end of this year. as our report shows, that strength is still intact. liquidity and capital remain high and, indeed, have increased at our largest banks over the course of the covid event. firms have sharply increased their reserves, setting aside resources today against losses they may incur tomorrow. banks are well positioned to serve as a bulwark against broader financial and economic stress. it is worth recognizing how things might have been different. this foundation would not exist, after a once - in - a - century shock, if not for a decade of work by officials and the banks themselves to make banks stronger and more stable, and to make banking supervision fairer, more efficient, and more transparent. those values are not contingent, fit only for an economic boom. they represent an ethic and a commitment — to addressing the most pressing supervisory and regulatory issues in the most effective ways — that are even more critical during a crisis. that ethic has steered the federal reserve through the last seven months, and it will continue to guide us through the recovery. it applies to our efforts to complete the implementation of basel iii reforms like the net stable funding ratio, tailoring them to the activities and risks of different institutions. it applies to our recent work to streamline the volcker rule and swap margin rule. 11 it applies to our assessment of the lessons of the covid - event shock, understanding which parts of our regulatory framework functioned well and which need improvement. 12 it applies to our international engagement, to ensure that global financial rules do not splinter and fragment as we gradually return to normal. 13 covid - 19 changed many aspects of the federal reserve ’ s work. it also affirmed the values and priorities that remain the same — those that will continue to guide us in our support for the financial system, the economy, and the country, long after the covid event has passed. thank you for your time. i look forward to answering your questions. 2 / 4 bis central bankers'speeches 1

challenges. i would say that we have seen clear examples of this conflict in recent years : in june 2018, analysts at handelsbanken capital markets considered it necessary to deny that the riksbank had changed its target variable in a newsletter. 28 the riksbank's focus on cpifxe in connection with the april meeting resulted in questions on whether the riksbank was changing target variable or rudder once again. this is not the case. another example is from september 2018. nyhetsbyran direkt writes : 29 cpifxe inflation ( the cpif excluding energy ), the measure on which the riksbank is currently focusing a lot on, … i have quoted two examples here but there are more. the measure that was intended to make it easier for us to understand and to help us in our monetary policy decision - making has instead come to be perceived as the actual target for monetary policy. for my part, i handle the trade - off between taking in other measures than actual inflation in the assessment and being clear that cpif inflation is the target for monetary policy as follows. the desirable properties for an underlying measure as i described earlier in my speech are very important to me. the underlying measures i analyse are of decisive significance when assessing the development of inflation. and i can say here that cpif excluding energy does not fare well in the competition. handelsbanken capital markets, ranterullen 25 june 2018. 29 19 october 2018. 15 in my speeches and presentations on monetary policy, i have in principle always referred to cpif inflation. when i have included underlying measures, they have never been alone. this has been my way of emphasising that it is cpif inflation – nothing else – that is the target for monetary policy. when speaking at the monetary policy meetings i have gone a stage further. on these occasions i have in principle never discussed underlying measures, but focused entirely on cpif inflation. what have we learnt? there can be a lot of white noise in the time series data used for economic analysis. this applies in particular to monthly data. one therefore needs to adjust the data for white noise and seasonal variations. if one wants to analyse the development of inflation, for instance, one must make these adjustments. the purpose is to calculate the underlying rate of inflation, or, in other words, core inflation. there are largely two different ways of doing this. one is to use more or less advanced statistical methods to adjust for