We all know about birdwatchers, and many of us know about central bank watchers. But how many of us know about watchers of regulation and supervision? Probably not many. This may seem surprising: savers, firms and taxpayers – they all care about sound banks.
So what is “watching regulation and supervision”, the theme of this conference, all about?
Ultimately, we are talking about accountability. As supervisors, we exercise public powers and carry out our tasks independently. Our independence requires accountability and transparency: the public must be able to assess how we use the responsibility we are given. Banks are the first to feel the effects of supervisory decisions. That’s why our decisions are open to administrative and judicial review.
But the effects of supervision and regulation on society are much broader, and the transmission channels are seldom straight.
How would banks have performed in the absence of supervisory measures? Is financial stability the result of good policy or good luck? How does the macroeconomic environment affect the performance of banks? What are the effects – and the potential unintended side effects – of regulation and supervision?