And measures of inflation expectations suggest that inflation is expected to remain low for many years to come. Graph 1  https://www.rba.gov.au/speeches/2019/sp-gov-2019-10-29.html  3/18  10/30/2019  Some Echoes of Melville | Speeches | RBA  Despite this success, things have not exactly worked out as hoped, and recent experience is causing some rethinking of aspects of the conventional wisdom.
Regulators and supervisors must fully understand any new financial innovations, instruments and market practices in order to have the expertise to develop models, assumptions and views of financial institutions, and certify the risk management of those supervised institutions. Of course, the effectiveness of any risk-based approach owes a lot to the supervisor’s ability for early identification and monitoring of new and emerging risks.