2/4  BIS central bankers' speeches  The need for surveillance to extend beyond traditional boundaries of financial services can make it harder for authorities to “stay within their lanes”. This can be further complicated when the primary responsibility for financial stability is not always clearly defined. More authorities today have acquired expanded powers to access information and respond to financial stability risks. Even where there is a single authority charged with the mandate for financial stability, such powers will tend to rely on a system of regulation and supervision over different actors in the financial system that is often discharged by different authorities, using different instruments and approaches. Ensuring effective coordination across such a system depends on a number of factors. Institutional set ups such as inter-agency arrangements – of which there are many good examples – are important and clearly even necessary. But they are not a sufficient condition for effective coordination. The most important factors for effective coordination are more likely to be internal ones – the submission of institutional agendas to a higher collective goal, an internal resolve to overcome inherent conflicts, and the organisational flexibility to move in a common direction with others. In increasing their agility to shift gears where required, authorities must also find ways to do so while preserving the credibility and predictability of policy. Shorter policy cycles and more frequent adjustments in response to developing risks can make this significantly more challenging. Communicating financial stability policies effectively will be key.

There are other areas of the assessment where I am more undecided. One of the recommendations was that we should regularly take into account other operators in the infrastructure than the banks and institutions. I agree that it is important to look further afield, not just in obvious places, when trying to identify threats and shocks. We should most probably take some steps in this direction. However, there are also risks entailed in this suggestion. One strength of our method of working has been the concentration on central, systemically-important issues. If we broaden our commitments we may be forced to give up some of this depth, and what we publish may be more difficult to grasp. Some of the recommendations concerned international connections in the stability work. Increased international surveillance is one of their recommendations that we are happy to follow. The integration of financial systems is increasing all the time and requires that we raise our gaze to take in the world around us. We already have this aim, but much remains to be done. Another aspect of internationalisation that is emphasised concerns crisis management. We are encouraged to continue with our crisis management exercises, but to carry them out together with our European colleagues. This is an important issue that we discussed in more depth in the Financial Stability Report published a year ago. We observed then that an integrated financial market has positive effects on the economy as a whole, but that it entails challenges for those of us who oversee the system.