Banking Supervision Examined

Ben Bernanke,Chairman of the Federal Reserve,has been reflecting on banking supervision in light of the financial crisis.There are two questions,Mr.Bernanke said:1.What have we learned? and 2.How can we apply those lessons? Increasing the effectiveness of supervision must be a top priority of our institution.The Federal Reserve is now requiring banks to identify the unintended consequences of new financial instruments.We coordinate closely with foreign supervisors,Mr.Bernanke revealed.Our close relationships have proved very helpful as we have dealt with this crisis.The crisis underscores the importance of liquidity in banks.International collaboration has enabled U.S. supervisors to learn from the experience,Mr.Bernanke pointed out.