Current conditions Having reviewed the major changes we have made to our regulatory and supervisory programs, let me offer a few brief remarks about the current state of the firms we regulate. The financial condition of the firms in the LISCC portfolio has strengthened considerably since the crisis.
banks' default probability (Expected Default Frequency)  %  7  %  %  1.4  USD/JPY  12 1.2  EUR/USD  Euro area banks (lhs)  6  1.0  1.4  Japanese banks (lhs) U.K. banks (lhs)  5  GBP/USD  0.8  1.2 1.0  Japan premium (rhs)  4  08 0.8  3  0.6  2  0.4  1  0.2  0.6 0.4 0.2 0.0 ‐0 0.2 2 ‐0.4 CY 1995  98  2001  04  07  10  13  0 1995 CY  16  0.0 98  2001  04  07  10  13  16  Notes: 1.