##al structure in order to make possible efficient and cost - effective supervision. · supervisors should be in close proximity to those who are to be supervised, and at the same time not under too much political influence. · if regulatory powers are shared among several institutions, there has to be a clear definition of powers and responsibilities. an efficient structuring of the flow of information and of the cooperation between the supervisory bodies involved is also important. · harmonised supervisory rules as well as their consistent application in practice are essential for creating a " level playing field " for the financial institutions in the different sectors. here in the united states, the role played by the federal reserve in financial supervision is not only well recognised but regarded as indispensable. in europe, however, that role is hotly debated. in addition to the above - mentioned general requirements, i would also like to mention some aspects which argue for central banks having a substantial involvement in supervision. · owing to the globalisation of financial markets and the accompanying profound structural changes within individual banking systems, not only microprudential institutional supervision but also looking at the implications for the financial system as a whole are becoming ever more important. · in this context, central banks are particularly affected since a stable financial system is an essential prerequisite of monetary policy. combining the practical supervision of institutions with the analysis of the stability of the financial system as a whole - " the marrying of microand macro - prudential analysis " – as the general secretary of the " bank for international settlements ", andrew crockett, once put it – brings benefits for supervision and monetary policy. effective financial market supervision relies on its own direct access to the relevant information. especially when there is an impending crisis, the key factors are · how quickly crucial information is available to those parties who need it, · how extensive that information is, · that the information is interpreted correctly · and that an appropriate set of instruents for countermeasures is available. for direct access to information, proximity both to the financial markets and to the institutions is an advantage. supervisors, who are active in the markets themselves and know the market participants from their own business relationships, possess major additional sources of information. it is precisely the central banks which maintain these permanent contacts – not only for their monetary policy operations but also because of their role in payment systems. central banks are therefore in a position to identify problems within the financial system earlier than pure bank supervisors are able to. the central

edgar meister : how should regulatory and supervisory responsibilities be shared among the national functional regulators? lecture by mr edgar meister, member of the directorate of the deutsche bundesbank, held at the multinational banking seminar in new york, 9 june 2001. * * * i ladies and gentlemen, voltaire, the famous french philosopher, once said : " if you see a banker jump out of the window, jump after him – there is sure to be profit in it ". well, having experienced the latest financial crises, i am not entirely convinced that it would be always wise to follow voltaire's advice. the topics of this seminar perfectly illustrate the potential risk of this kind of “ herding behaviour ” and – not least – the challenges for regulators and supervisors. i am delighted to have been given the opportunity of speaking here this morning, and i would like to elaborate on the issue of how regulatory and supervisory functions should, or could, be shared between national authorities. naturally, i wish to go into the current debate on this topic in europe. ii the design of regulatory and supervisory responsibilities is one of the most important matters affecting the future course of financial market policy. there is, however, no universally valid answer to the question of how this should be done. the best way of organising supervision cannot be derived from theory. that is why we can see many forms of supervisory organisation in international practice that function well. this diversity in the design of supervision is not surprising ; after all, the supervisory systems are, in each case, incorporated into their respective economic and legal structures and have evolved over time. however, it may also be said about supervision that " the most constant thing is change ". that is why, in the recent past, some countries – such as the united kingdom – have radically reorganised their supervision or are discussing changes, as in austria, ireland and germany, for example. although there is no ready - made solution as to how responsibilities should be assigned in order to put in place an effective and efficient supervisory structure, there are nevertheless a few requirements that should be fulfilled. · the supervisory structure should be geared to the financial market structures. in other words, due account has to be taken of developments on the markets, such as national and international mergers and acquisitions, and the emergence of ever larger business enterprises. · the institutions in charge must have expert knowledge and experience in their special field, they need an appropriate number and quality of staff as well as an efficient internal organisation