simply underscores the need for congress to modify u. s. banking laws and permit the regulatory environment to catch up with market events. meanwhile, bank supervisors and regulators should remain focused on their principal tasks. first, to ensure that the banking system remains sufficiently safe and sound, posing little risk to the federal safety net and adequately protected against systemic risk. second, to ensure that the industry continues to provide the american public with a full range of competitively priced banking services and conforms to legislative standards of competitiveness. perhaps more than before, achieving these goals requires us to adapt our practices to changing circumstances within the banking industry and to take full advantage of the technologies that exist. clearly, as the industry has changed, so has bank supervision. as banks expanded nationwide, state and federal supervisors worked together, producing the interstate supervisory protocol that provides a more seamless oversight process for state chartered banks. as banks grew larger and more complex, we focused more on risk management practices and controls and less on a bank ’ s condition at a point in time. we also became more risk focused in our overall supervisory approach, emphasizing those activities that presented the greatest risks. as financial innovation and capital arbitrage took hold, we also became more aware of the need to update regulatory capital standards and to make greater use of market discipline. we are pursuing our objectives both domestically among ourselves and abroad through the basel committee on bank supervision, under the auspices of the bank for international settlements in basel, switzerland. we are designing a way forward, building upon the “ three pillars ” approach outlined in a consultative document released today by the basel committee, a subject i will return to in a moment. this approach encompasses ( 1 ) a strong, risk - sensitive regulatory capital standard ; an active supervisory program ; and ( 3 ) improved bank disclosures that allow the marketplace to evaluate an institution ’ s risk posture and to reward or discipline it appropriately. in my remarks today, i would like to address many of these and other points, with particular emphasis on the supervisory process and how we at the federal reserve are adapting to change. at the outset, i would emphasize that bank supervision is, by its nature, a dynamic process. our practices must constantly improve or they will become quickly outdated. supervisors must also be flexible, both in their application of supervisory techniques to banks and in their expectations regarding what practices individual banks should follow. perhaps more so than any other, the u. s. banking system is highly diverse, with its thousands of

banking supervision. 1 / 3 bis - central bankers'speeches let me now turn to our immediate challenge, that of inflation. while still in the process of recovering from the pandemic, we were hit by an unusual confluence of supply shocks. we were hit, for example, by a spike in global prices of fertilizer – so not just food prices and not just oil prices.. this was due, of course, to the sanctions on [ shipping from ] belarus and russia. in response, we tightened monetary policy and we tightened aggressively, the way an inflation - targetting central bank would. we worried about expectations, and we worried about second - round effects. today, we're beginning to see tantalizing fruits of our efforts. headline inflation seems to have peaked and looks to be on its way to our target range of 2 to 4 percent. our monetary board, our deputy governor francis dakila and his team are to be thanked for this. nonetheless, it's too soon to declare victory. core inflation remains high. there are still upside risks to inflation – for example, risks in the form of el nino and further supply shocks. we will wait and see. we will analyze the data as they arrive, and that analysis will decide monetary policy down the road. the next challenge is the payments system. for the sake of efficiency, we seek the magic of digitalization. we want this magic to also help with financial inclusion. we're making some progress. at last count, 42 percent of retail payments were in digital form. this is up from just 1 percent ten years ago. that proportion should hit our target of 50 percent this year. at this stage, we've given licenses to 258 digital payment providers. over time, we expect competition and network effects to result in a system where the most innovative, efficient and responsible providers truly respond to the needs of customers. this digitalization has been a pathway to financial inclusion. more filipinos are now part of the formal financial system. in our financial inclusion survey in 2021, 56 percent of [ adults ] in the country had a bank account, a significant increase from just 23 percent in 2017. we're confident we will reach our target of 70 percent by this year. we're not stopping here. these accounts should provide the opportunity for people to build savings buffers, invest in their future and more actively participate in the digital economy. programs like paleng - qr help digitalize crucial value