requirements throughout the credit cycle and recently as a specialized tool to provide an analytical grounding for the decisions we have made on capital distributions during the covid event. then i will briefly review the recently released scenario for the 2021 test and discuss other changes for the upcoming stress testing cycle. the 2020 stress tests we now use stress testing in two important but different ways : to set capital requirements during normal times and to assess capital adequacy during exigent times. in march of last year, the board of governors finalized the stress capital buffer requirement, which uses the fed ’ s stress test results to set capital requirements for large banks, and by doing so, simplified our overall capital regime. while this new framework has the same goal as the previous comprehensive capital analysis and review ( ccar ) framework — using forward - looking analysis to help ensure that banks have sufficient capital to survive a severe recession while still being able to lend to businesses and household — it integrates our stress testing regime with our ongoing capital requirements so that large banks now have a single suite of dynamic and risk - sensitive capital requirements. while that framework is simpler, it is no less stringent than the ccar framework — a framework that 1 / 5 bis central bankers'speeches contributed to a more than doubling of the common equity ratio at banks between 2009 and 2019. at the time we made the stress capital buffer final last march, we estimated that the stress capital buffer would have further increased capital requirements for the largest and most complex banks. by design, the new framework better captures systemic risk by requiring those banks to establish a buffer to absorb losses they ’ d take in a severe recession in addition to their g - sib surcharges. it is useful here to pause and put stress testing in the context of bank supervision in general. both supervision and stress testing specifically have roles during normal times as well as times of stress, but those roles are somewhat different depending on the circumstances. like all supervision, stress testing conducted during normal times of solid economic growth and financial stability is aimed at helping ensure banks remain in safe and sound condition. we use it to set the capital buffers, which give firms incentives to hold capital during normal times, so they are prepared to weather downturns. during periods of economic and financial turmoil, the goals shift to understanding banks ’ exposure to the turmoil and to ensuring that banks can support households and businesses by continuing to lend. the modern bank stress testing regime was born in the solvency crisis of 2009

doing good research : ( i ) first, there must be support from the top, and in our case from the central bank governors. without this support, any attempt to build a good research department will most likely fail. i would like to say that the presence of us governors in this conference is a testament of our support for research in our central banks. reserve bank of fiji for us at the rbf, two significant initiatives were implemented as part of our collaboration with griffith university. we have set up a research unit in our economics group with the aim to produce more research papers. selected staff are rotated to the unit as an opportunity to undertake research and produce working papers. in addition, the rbf now provides staff with a cash reward of $ 1000 if their research is published as either working papers or journal articles. ( ii ) second, there must be highly trained research staff and a system of measuring quantity and quality of research output. investing in the continuous development of our central bank staff is important and i know that a significant part of our central bank budgets is allocated to training and development. we must continue with this and have as a priority the need to build highly trained research officers. however, a real challenge faced by our small central banks is attracting and retaining research capacity and capability as many of our staff are so inclined to leave us for universities that pay more and conduct more research. more collaboration with academic institutions and research institutes such as the one we now have with griffith could help address this. going forward, we have to establish a system of measuring the quantity and quality of our research outcomes. credibility and quality of research is crucial and good evidence through a policy proposal supported by good research is highly likely to be considered for decision making. research must also be forward looking in nature to be relevant when the issues it addresses are faced by policy makers. ( iii ) third, there must be a productive and rich research environment for good research to be possible. one way to ensure this is making our central banks open to external research from academia, the fruits of which we are witnessing today through our collaboration with griffith university. there is room therefore for more collaboration, which brings me to the second key message that i wish to share today : 2. extending our research collaboration beyond the griffith university my second key message is that we should extend our research beyond the current collaborations with griffith university. our role as central banks has never been more important than it is today. we have the core responsibility to promote macroeconomic and financial