. this isn ’ t an argument against title ii resolution. dodd - frank ’ s addition of title ii to the resolution toolkit was an important advance to regulators ’ ability to mitigate financial instability. but we must recognize that title ii by itself it is not sufficient to eliminate the advantages of being perceived as too big to undergo ordinary bankruptcy at the holding company level. moreover, even with a viable title ii resolution regime in place, we must recognize that there still will be disruption to the financial system when a large firm fails. this suggests to me that while a title ii single point of entry resolution is a very useful tool that we should continue to develop, we should view it as more preferable to prevent the failure of the sifi in the first place. in this regard, i think we have made considerable progress by raising capital and liquidity requirements for large, complex firms. in addition to the role of these requirements in reducing the probability of failure, higher capital and liquidity requirements for large, complex firms also have the ancillary benefit of offsetting any residual competitive advantage that might remain for sifis because of how they are likely to be treated under title ii resolution. the comprehensive capital analysis and review ( ccar ) stress tests are important in this regard because they make the capital requirements for large, complex institutions forward looking. what matters is not just the current capital ratio, but also what the capital ratio could be if a stress environment were to materialize. the ccar process is also useful because it focuses on the quality of the bank ’ s capital planning processes. it is not sufficient just to have enough capital ; the bank ’ s management and directors need to be able to evaluate the bank ’ s ongoing capital needs in a thoughtful and thorough manner. bis central bankers ’ speeches the responsibility of the management of a large, complex firm does not end with capital planning. firms ’ managers need to ensure that they can respond to financial or operational weakness of any type by having robust recovery plans that get triggered long before resolution becomes necessary. firms should develop and track metrics that not only identify when they are on the verge of insolvency or default, but also trigger appropriate remediation actions whenever the firm begins to become stressed. these plans should identify actionable options that the firm can take in response to financial weakness that will restore the confidence of the firm ’ s counterparties in the firm without the need for extraordinary official sector support. firms must also have disciplined processes that analyze the

ll discuss some changes that are of particular interest to banks that lend to smaller businesses and to owners of small and medium - sized enterprises as well. i would like to close by giving you some insight into the process and the timeframe that is guiding our work to complete the impact studies and to move toward release of the final consultative paper. at that point, i look forward to hearing and learning from you in what i hope will be a rich discussion session. purpose of regulatory capital first, let ’ s look back for a moment to understand the path we ’ ve taken. the basel committee has long sought ways to ensure that banks hold sufficient capital relative to the risks they face. capital, of course, helps individual banks to weather unexpected losses. on a macro scale, requiring all banks to maintain adequate levels of capital helps to safeguard the stability of the financial system. when a financial system is more stable, banks are better able to provide businesses and consumers with funding and credit through good times and bad, which promotes the long - term growth of the economy. the risks involved in lending and borrowing have long been recognized, “ for [ a ] loan oft loses both itself and friend, ” warned shakespeare some centuries ago. for their part, banks – like all companies – seek a healthy balance between risk and opportunity. because banks serve as key intermediaries of credit within the economy, poor credit decisions harm not just banks, but borrowers as well. overly restrictive terms for credit make loans less accessible to all businesses, impeding their ability – and that of the economy – to grow. if the terms for credit are too lax, loans may be extended in volumes that borrowers ultimately may be unable to repay in full. in such circumstances, both borrowers and lenders may experience losses and bankruptcies, depleting the future supply of credit. a banking system that encourages lending to companies or individuals in excess of their ability to repay is one that hurts not just borrowers, but society as a whole. goal of the new accord in promoting the efficient use of banks ’ capital resources, the member countries of the basel committee are revising a now outdated international agreement on the minimum level of capital banks are required to hold. that original 1988 agreement was relatively uncomplicated and represented an important first step in the development of an internationally acceptable standard. it has since been overtaken by advances in the financial sector – and in the economy. new technology, the globalization of financial markets, and innovative financial