Financial innovation can unlock economic value but, if banks are to reap the benefits, they need robust defenses against risk. Over the past two decades, bank profits have been underpinned by high leverage, creating vulnerabilities. The role of prudential regulation is to ensure that banks are well equipped to deal with risk, thereby stabilising their profitability. The Basel Committee on Banking Supervision under Nout Wellink's chairmanship has made important progress towards this goal.
Full speech, including charts (PDF, 5 pages, 95 kb)
