my lodestar would be to rely wherever possible on empirical analysis to direct our policy choices and to be open to change where supported by this analysis. as supervisors, we should be extremely supportive of efforts to better understand ratings as an assessment and communication tool, as well as those that make our supervision processes have more repeatable outcomes. we should encourage our examiners and economists to conduct more empirical analysis around supervisory ratings. for example, some recent scholarship suggests ratings can have a positive impact on reducing the insolvency risk of supervised firms. 10 we should do more analysis and careful examination to identify what drove those results. as we conduct this analysis, my sense is that we should focus on two main variables : the consequences of the ratings that i ’ ve described — for example, a firm having its activities or acquisitions curtailed — and whether or not these consequences are properly calibrated relative to the circumstances that gave rise to the rating. to illustrate, let ’ s return to the earlier example of a firm with a deficiency related to the risk management of its capital adequacy but that has proven itself through our stress tests to have sufficient financial resources. in contrast, imagine a bank that does not share the risk - management deficiency but whose stress test results indicate that the allen n. berger, jin cai, raluca a. roman, and john sedunov, supervisory enforcement actions against banks and systemic risk, working paper, september 2020, available at ssrn, https : / / papers. ssrn. com / sol3 / papers. cfm? abstract _ id = 3696428. - 15 firm has inadequate capital. our assessment for both firms may be that each should receive an unsatisfactory capital rating. in my opinion ( and i acknowledge that there are some who would reasonably disagree with me ) between the two firms, the firm that faces a potential capital shortfall should be the graver concern. yet, the essential message to both firms and a likely consequence of the rating — the risk of falling out of well - managed status — is identical. to me, this outcome makes no sense. why should the firm that is objectively weaker face the same consequences as the firm that is objectively stronger? although the law dictates the most material consequences of an unsatisfactory management rating, we have the authority to define that rating and its calibration, as well as to define any additional supervisory consequences that are not prescribed in the law.

##b seems to have broadened its objectives considerably in order to preserve the euro area. in fact it seems to be concerned about financial stability and growth as well as price stability. is the ecb now pursuing a triple objective? not at all. first, in the current environment, where inflation is too low, the objective of growth is equivalent to the objective of price stability. ultimately, what we have been doing since the start of the crisis has been aimed at ensuring price stability, but this has been done by supporting aggregate demand. there is no contradiction. of course there may be situations where the central bank is caught in a dilemma between the objective of price stability and the objective of growth. but that ’ s certainly not the case today. in addition, looking beyond the current situation, the treaties specify that the eurosystem lends its support to general economic policies in the union, without prejudice to the objective of price stability. the situation today as far as financial stability is concerned is pretty clear. the ecb has three functions : a monetary function with both conventional monetary policy tools ( interest rates ) and unconventional ones ( liquidity, asset purchases, etc. ). since banking union was put in place the ecb has also had a micro - prudential function regulating banks and a macroprudential role. so these three functions give it both an objective of price stability and also objectives of financial stability, but these are clearly distinct and involve different tools. they are also separate in terms of governance, since the eu rules entrusting banking regulation to the ecb make great efforts to ensure that the decision - making processes be kept apart. so we are attached to the principle of separation : different tools for different objectives. isn ’ t it a little more complicated with macro - prudential policy? in macro - prudential matters the ecb intervenes to complement action taken at national level, but on a fairly limited basis – regulating banks ( technically, using tools identified in the capital requirements directive or crd iv ). for instance, it can decide to impose higher capital requirements on banks in a country if it feels loan growth is excessive and the bis central bankers ’ speeches national authorities have not reacted. but it does not have the power to get involved in fiscal, structural or regulatory affairs or with players such as insurers and investment funds. there are plenty of people who think that a central bank with several potentially conflicting objectives cannot remain totally independent. what do you say to that