attracted hateful criticisms. the tendency of some groups, like a special - forces warrior, to fight every new regulation had reached a vexing point. despite resistance from pressure groups to resist, the bank had proceeded with its regulatory reforms and soldiered on effectively. it took quite some time for players in our economic system to fully realise that banking is a different kind of business and financial systems are not and will never be totally free market systems. over the years much has been achieved in terms of the health improvement of deposit - taking institutions in the country. effective banking supervision is an evolving discipline. free flows of capital in a globalised world marked by all kinds of disruptions, unleashed by economic and non - economic forces, the quests for high returns by investors and quick profits by speculators, fraudulent practices, excessive risk - taking and violent economic cycles, amongst others, have made regulation and supervision of financial institutions an unprecedentedly challenging task. the regulator ’ s job has become increasingly complex and demanding in terms of skills and clairvoyance, more so after the august 2007 international financial crisis. as regulators, we need to constantly bear in mind that any capitalist economy inevitably progresses from conservative finance to reckless speculation. the economy has financing regimes under which it is stable and financing regimes under which it is unstable. in other bis central bankers ’ speeches words, over a period of prosperity, a capitalist economy transits from financial relations that make for a stable system to financial relations that make for an unstable system. we also need to bear in mind that it ’ s in the personal interests of the ceos of banks to show profits, often by any means, for the benefit of their shareholders. and it is simply not true that the pursuit of their individual interests will lead to financial stability. what ’ s good for an individual ceo may not be necessarily good for the banking industry as a whole. the self - interests of bankers and levered investors do occasionally lead to economic contractions and a loss of human welfare. i need not emphasise to a crowd like this one that financial stability is an indispensable precondition for economic growth and human welfare. there is every reason for regulatory authorities to act proactively in order to prevent financial crises from developing in the first place. with the recent experience that the bank of mauritius had with regard to an ailing bank, i cling to the view that regulators must broaden their scope and take initiatives to prevent the development of practices that favour financial

eyes and ears of the fed on wall street, and we supervise many of the largest financial institutions in the country. we operate fedwire® – the conduit for large money transfers between banks. and, we provide banking services to the u. s. treasury, and central banks and governments from around the world. at the regional level, we continually track economic conditions in our district with the help of a number of tools that we have created for this purpose. for example, to fill a void in current measures of economic output, my staff produces indexes of economic activity which approximate output for new york state and new york city on a monthly basis. we also have initiated a consumer credit panel so that we can monitor local credit conditions. and, we have begun a quarterly survey of small business finances to track the issues related to credit and financing for this key job - generating sector. if you are not already part of the survey, i invite you to give your business card to my staff and we will add you to our survey universe, so that it can reflect your views, too. to share the information that we gather and produce about our diverse district, we have created a rich website with very localized current data and maps on conditions in the region. i invite you to visit us on the web to explore the highly detailed information on small business, credit and housing conditions that we provide. finally, and crucially, in the aftermath of the financial crisis, we are working with our colleagues in washington and at other agencies in the united states and abroad to help put the nation ’ s financial system on a firmer footing. as regulators, we have made progress, for instance, in crafting tougher capital rules for the biggest banks, but much remains to be completed and we are determined to keep at it. i recognize fully that there can be no return to pre - crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. we must learn from the economic catastrophe of the past few years so that the financial system is able to perform its essential role in supporting economic activity without being a source of instability for the economy as a whole. all in all, there is a lot to keep my colleagues and me quite busy – even in normal times. national economic conditions now, what is the outlook for and risks to economic activity, employment and inflation in the nation? since the recession ended in 2009, the economy has grown at a relatively modest pace.