which inflation is so low and stable over time that it does not materially enter into the decisions of households and firms. nonetheless, i cannot help but conclude that the progress that the federal reserve has achieved over the years in moving toward this old definition of price stability has contributed to the improvement in our nation's longer - term growth prospects that became evident in the latter part of the 1990s. so, for the time being, our conventional measures of the overall price level will remain useful. president poole has picked an appropriate topic for this group to consider. the historical record indicates that the increased transparency of the federal reserve has helped improve the functioning of markets and enhanced our credibility. but, to repeat, openness is more than just useful in shaping better economic performance. openness is an obligation of a central bank in a free and democratic society. u. s. elected leaders chose to vest the responsibility for setting monetary policy in an independent entity, the federal reserve. transparency of our activities is the means by which we make ourselves accountable to our fellow citizens to aid them in judging whether we are worthy of that task.

continue to play an important role in the u. s. economy by extending credit, providing banking and payment services, and participating in u. s. securities and derivatives markets. context matters, and when we discuss changes to the bank regulatory framework - including through changes to capital requirements - we need to understand the direct and indirect consequences that may result. potential consequences of capital reform one of the key questions i ask when considering regulatory proposals is whether the benefit of the change outweighs the costs of implementation, both for the financial institutions subject to the proposal and for the broader economy. on a simplistic level, higher capital levels make the banking system safer. but this must be the beginning of the analysis, not the definitive end. increased safety comes at a cost, and the business of banking is built upon risk. the complete elimination of risk would transform a bank into a public utility. assuming this is not the desired end state of the banking system, we must evaluate a proposal's merit by thoroughly understanding the balance between these benefits and the resulting costs. as i noted earlier, the u. s. banking system continues to be much better capitalized than before the 2008 financial crisis. that capital cushion has broadly enhanced the resiliency of the banking system through business, economic, and interest rate cycles, enabling the banking system to continue supporting the u. s. economy, even throughout the pandemic and the related economic stress. while the full extent of " costs " under the proposal are not entirely clear, in the aggregate, those costs - including the direct costs experienced by banks, and the indirect costs experienced by bank customers and the u. s. economy - would be substantial. capital increases of this magnitude are likely to have a detrimental impact on u. s. market liquidity and lending, and firms without sufficient scale are likely to exit certain markets. increased capital requirements for certain types of loans may also lead to reduced credit availability or increased cost of credit, which could disproportionately harm underserved markets, businesses, and communities. ultimately, bank customers will bear the cost of these increases. the path forward for capital reform what does the path forward entail? the agencies have received substantial initial public feedback, and in response, have extended the comment period into mid - january 2024. the agencies have also engaged in a parallel effort to gather more information about the potential impact of the proposal's approach and calibrations. these actions reflect an important recognition of the