these issues. the second pillar in the proposed new capital adequacy framework has to do with the supervisory review of capital, a critical complement to minimum capital requirements. the consultative paper calls on supervisors to ensure that each bank has sound internal processes in place to assess the adequacy of its capital based on a thorough evaluation of its risks and capital structure, thus moving the accord beyond a ratio - driven minimum capital standard to a comprehensive approach for assessing capital adequacy. in general, supervisors have expected and continue to expect banks to hold more than the regulatory minimum amount of capital. in proposing this supervisory review of capital, the basel committee intends to foster a more active dialogue between banks and their supervisors with respect to the actual level of capital banks choose to hold. i want to stress, however, that this proposed approach to assessing capital adequacy in no way intends to replace the judgment and expertise of bank management. nor is this approach meant to shift ultimate responsibility for the adequacy of bank capital to the supervisors. on the contrary, i believe that managers are the ones with the most complete understanding of the risks that their institutions face and it is they who must have the primary responsibility for overseeing these risks. the task for supervisors in this framework is to evaluate how well banks are assessing their own capital needs relative to their risks, including whether banks are appropriately addressing the relationship between different types of risks. to this end, the basel committee is currently developing guidance to help supervisors evaluate internal capital assessments conducted by banks. in the event that a bank ’ s internal capital adequacy process is lacking, supervisors must have the knowledge and authority to take corrective action. there can be no doubt that implementing the supervisory review of capital will require considerable insight and flexibility on the part of supervisors because they will have to tailor their efforts to the unique risk profiles of particular institutions. at the same time, this approach should allow supervisors to draw on their cross - institutional knowledge as they assess the strengths and weaknesses of a bank ’ s risk management and capital allocation processes relative to those of its peers. the g10 supervisors recognize the obvious implications that this approach will have for supervisory resources. in order to keep pace with industry innovation, it is clear that we will have to step up our training and consider effective ways for making the most use of our limited resources. the basel committee also recognizes the importance of these issues for the non - g10 countries and is working toward providing the training and other types

than the national average - and hispanic families have been affected the most. 2 this is largely because on average, hispanic households spend a larger share of their budgets on items most affected by the recent high inflation. 1 / 5 bis - central bankers'speeches the inflation onion the sources of high inflation are many and complex, and they stretch across the globe. nearly all economies are experiencing unusually high rates of inflation. to better understand how that happened and what it portends, it is useful to think of inflation in terms of three distinct layers of an onion. in this analogy, the onion's outer layer consists of prices of globally traded commoditiessuch as lumber, steel, grains, and oil. they have experienced a surge in demand as the global economy has rebounded from the pandemic downturn. in addition, russia's war on ukraine and the resulting actions have caused energy prices to soar. these higher costs get passed on as higher prices for consumers. i am sure everyone in this room has been forced to manage skyrocketing costs on important supplies over the past two years. the middle layer of the inflation onion is made up of products - especially durable goods like appliances, furniture, and autos - that have been affected by severe supply - chain disruptions. many of you have also had first - hand experience with the impact of shutdowns and supply - chain bottlenecks. there haven't been enough inputs to produce products, and not enough products to sell - all at a time when demand has been skyhigh. many of you have also had customers lining up at your doors - but not enough products in stock. this imbalance between supply and demand has contributed to large price increases. to give some examples, prices for furniture rose over 13 percent last year, new cars were up nearly 12 percent, and used vehicles skyrocketed an astounding 50 percent. the innermost layer of the onion consists of underlying inflation, which reflects the overall balance between supply and demand in the economy. therein lies our biggest challenge. prices for services have been rising at a fast rate as the economy has recovered from the recession. in particular, rents for new leases have climbed rapidly. and labor shortages are everywhere, leading to higher labor costs. indeed, inflation pressures have become broad - based across a wide range of goods and services. good news and bad news what does the future hold? i will start with some good news. first, prices of many commodities