end to the privileged treatment of sovereign exposures. we must regulate shadow banking. and we must finalise basel iii in a sound manner. yes, there has been a commitment to not raise capital requirements significantly on average, as the basel committee and the g20 have clarified. but several german banks, for example, have already lifted their regulatory equity by more than 100 per cent between december 2010 and june 2015 – that ’ s an increase from 58 billion to 118 billion euros. so we have already achieved a substantial increase in capital. but make no mistake : high - risk portfolios will end up with higher requirements. moreover, a pledge to not significantly increase capital requirements certainly doesn ’ t mean that requirements will fall back to their low pre - crisis levels. the bottom line is this : we must not lapse back into bad old habits when we ’ re finalising, implementing and enforcing the reforms aimed at restoring financial stability. financial intermediation is important for our advanced economies. but if it ’ s not or insufficiently regulated, it can do more harm than good. that should be borne in mind in each and every decision we take. but talking about rules and their enforcement is one thing – they will only lead to better finance if banks and investors change their behaviour accordingly. banks, especially european ones, have to adapt their business models. they need to set themselves sustainable profit targets which do not undermine ethical behaviour. without a doubt, such financial policies need to be complemented by fundamental economic policy reforms. but i ’ m certain that sound financial and monetary policy will be a cornerstone of a stable financial system that serves the development of the real economy over the long term. 6. conclusion esteemed colleagues we are facing two challenges simultaneously : to reanimate economic growth, and to build a sustainable financial system that is fit for the 21st century. bis central bankers ’ speeches i am convinced that our policies need to set their sights on a long - term solution – a lasting cure, if you will, not an endless supply of painkillers. we should not turn a blind eye to the short - term challenges we face, of course. but what we must do is refrain from solutions that encourage excessive indebtedness. finance will be an important ingredient in the cure for growth – but it will need to be of a better quality, not a greater quantity. and now that i have preached abstinence, let us enjoy a delightful lunch! bis central bankers ’ speeches

stanley fischer : us inflation developments speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the federal reserve bank of kansas city economic symposium, jackson hole, wyoming, 29 august 2015. * * * accompanying charts can be found at the end of the speech. i am delighted to be here in jackson hole in the company of such distinguished panelists and such a distinguished group of participants. i will focus my remarks today on forces – domestic and international – that have been holding down inflation in the united states, 1 and some of the consequences of recent – primarily international – developments. although the economy has continued to recover and the labor market is approaching our maximum employment objective, inflation has been persistently below 2 percent. that has been especially true recently, as the drop in oil prices over the past year, on the order of about 60 percent, has led directly to lower inflation as it feeds through to lower prices of gasoline and other energy items. as a result, 12 - month changes in the overall personal consumption expenditure ( pce ) price index have recently been only a little above zero ( chart 1 ). the past year ’ s energy price declines ought to be largely a one - off event ( chart 2 ). that is, while futures markets suggest that the level of oil prices is expected to remain well below levels seen last summer, markets do not expect oil prices to fall further, so their influence in holding down inflation should be temporary. but measures of core inflation, which are intended to help us look through such transitory price movements, have also been relatively low ( return to chart 1 ). the pce index excluding food and energy is up 1. 2 percent over the past year. the dallas fed ’ s trimmed mean measure of the pce price index is higher, at 1. 6 percent, but still somewhat below our 2 percent objective. moreover, these measures of core inflation have been persistently below 2 percent throughout the economic recovery. that said, as with total inflation, core inflation can be somewhat variable, especially at frequencies higher than 12 - month changes. moreover, note that core inflation does not entirely “ exclude ” food and energy, because changes in energy prices affect firms ’ costs and so can pass into prices of non - energy items. inflation as measured by the consumer price index ( cpi ) generally sends the same broad message as does the pce price index ( chart 3 ). that similarity should not be surprising, because the cpi is