ben s bernanke : lessons of the financial crisis for banking supervision speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the federal reserve bank of chicago conference on bank structure and competition, chicago, illinois ( via satellite ), 7 may 2009. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * after more than a year and a half of financial crisis, both bankers and policymakers must contend with two questions : what have we learned from this extraordinary episode? and how can we apply those lessons to strengthen our banking system and to avoid or mitigate future crises? getting the answers to these questions right is critical for our future financial and economic health. 1 the federal reserve has been intensively evaluating the lessons of the crisis, both with respect to the companies we supervise and to our own policies and procedures, and we are actively incorporating what we have learned into daily supervisory practice. increasing the effectiveness of supervision must be a top priority for our institution. in my remarks today i will outline some steps that the federal reserve has already taken in the wake of the crisis to strengthen capital, liquidity, and risk management in the banking sector, as well as to improve the supervisory process itself. i will also touch on what we have learned about the importance of effective consolidated supervision and the potential benefits of a more macroprudential orientation to financial oversight. the federal reserve's role in banking supervision it may be useful first to briefly review the federal reserve's bank supervisory responsibilities and how they interact with the other parts of our mission. the fed has supervisory and regulatory authority over bank holding companies ( including financial holding companies ), state - chartered banks that choose to join the federal reserve system ( state member banks ), the u. s. operations of foreign banking organizations, and certain types of u. s. entities that engage in international banking. 2 in fulfilling these responsibilities, we work with other federal and state supervisory authorities to promote the safety and soundness of the banking industry, foster the stability of the broader financial system, and help ensure fair and equitable treatment of consumers in their financial transactions. the federal reserve banks manage the process of onsite bank examinations, while providing a strong regional presence that allows us greater insight into local economic conditions. besides working with other u. s. agencies responsible for the oversight of banking and other areas of the financial

our technological and data skills and capabilities has also been a focus of the central bank. while this involves an array of initiatives to develop organisational capabilities and better embed a data culture in the bank, i would like to highlight a particular initiative which we launched this week. artificial intelligence is already an important technology for financial services firms, central banks, and the wider economy – and is becoming more central to the provision of financial services to both households and businesses. ai, like all innovation, poses both benefits and risks. though the nature and scale of those benefits and risks is still uncertain, their potential is significant. in this regard, on monday i was delighted to launch a research partnership programme between the central bank and insight research ireland centre for data analytics. this partnership represents for both organisations a landmark collaboration to push the boundaries of artificial intelligence ( ai ) and data science. for the bank, it will provide us with additional capacity to deepen our understanding of applications of ai and data science to safeguarding consumers and the financial system ; and it will help us as an organisation to better anticipate, support and manage the risks of innovation related to ai, which i believe will be central to delivering on our mandate in the future. while the programme is just one element that will build capacity for the bank to supervise ai and to use ai and data science itself across all our roles, the partnership will enable us to catalyse activity to answer applied policy - driven and fundamental research questions related to ai, data science, and related disciplines – all for the public good in ireland. conclusion so let me conclude. fintech is an increasingly important of our financial system, as tech and finance become increasingly inseparable. that may well accelerate in the coming years, along with the digitalisation of the rest of society – with more widespread and deeper usage of ai and tokenisation representing the potential next frontier. 7 / 8 bis - central bankers'speeches as i have said technology itself is not necessarily good or bad – what matters is how it is deployed. this includes how innovative firms run their businesses, and manage the risks facing them, their customers and the system. and while such changes to our system, and the potential changes to come, may be fundamental, they will not alter our supervisory fundamentals – though it may alter how we need to deliver them. for protecting consumers and the system – through good governance, risk management, and resilience – will always remain key. so too will the fact that it