firms belonging to different segments of the financial industry. this implies that the traditional approach of specialised agencies is no longer perceived as satisfactory. on the other hand, the problems related to the creation and effective management of a universal agency are very complex. indeed, co - ordination remains necessary, be it between specialised agencies or between the organisational units within a universal agency. a second issue involves the role played by central banks. there are three main arguments in favour and three main arguments against the unification of prudential supervision and central banking. the arguments in favour are the following. first, there is a potential for exploiting synergies between the supervisory function and the core tasks of a central bank. a thorough understanding of the proper functioning of payment systems and of other market infrastructures is essential for the smooth conduct of monetary policy. information collected for supervisory purposes may play a significant role in this. the second argument concerns the need to focus on systemic risk. central banks have a privileged position from which to assess the impact of macroeconomic shocks and the financial stability of groups of intermediaries. the third argument concerns the independence from political interference and the technical expertise of central banks. similarly, we can identify three arguments supporting the establishment of a supervisory agency outside the central bank. the first one concerns the alleged conflict of interest between monetary policy and prudential supervision. many authors have argued that the body in charge of monetary policy cannot be entrusted with supervision, because the monetary policy stance would be affected and it would pose a threat to price stability. a second argument is based on the observation that no clear distinction is made between the different financial products and intermediaries belonging to distinct financial sectors. i already discussed this argument earlier when i talked of the technological advances. the third and final argument concerns the need to avoid an excessive concentration of power in the central bank. while it may be a difficult and controversial exercise to weigh up the pros and cons of the two solutions at a general level, without making allowances for the specific environment, in the particular context of the eurosystem the balance of the arguments leans in favour of maintaining a strong role for national central banks in prudential supervision. the reasons for this are twofold. first, the conflict of interest regarding monetary policy and concentration of power is no longer relevant given the structure of the eurosystem, since the introduction of the euro has implied an institutional separation between the monetary jurisdiction – the euro area – and the supervisory jurisdiction – domestically chartered institutions

christopher j waller : almost as good as it gets - but will it last? speech by mr christopher j waller, member of the board of governors of the federal reserve system, at the brookings institution, washington dc, 16 january 2024. * * * thank you, david wessel, and thank you to brookings for the opportunity to speak to you today. in the second half of 2023, i gave a series of speeches about the apparent conflict between the strength of economic activity in the third quarter and continued progress toward the federal open market committee's ( fomc ) 2 percent inflation goal. 1 i said then that " something's got to give " - either activity needs to moderate, or progress on lowering inflation is going to stop. by late november, the latest economic data left me encouraged that there were signs of moderating economic activity in the fourth quarter, but inflation was still too high. as of today, the data has come in even better. real gross domestic product ( gdp ) is expected to have grown between 1 and 2 percent in the fourth quarter, unemployment is still below 4 percent, and core personal consumption expenditure ( pce ) inflation has been running close to 2 percent for the last 6 months. for a macroeconomist, this is almost as good as it gets. but will it last? time will tell whether inflation can be sustained on its recent path and allow us to conclude that we have achieved the fomc's price - stability goal. time will tell if this can happen while the labor market still performs above expectations. the data we have received the last few months is allowing the committee to consider cutting the policy rate in 2024. however, concerns about the sustainability of these data trends requires changes in the path of policy to be carefully calibrated and not rushed. in the end, i am feeling more confident that the economy can continue along its current trajectory. let me start with the data on economic activity that has brought me to this view, and then i'll talk about the labor market, financial conditions, and inflation. i'll conclude with what i think the implications are from all that for monetary policy. first, economic activity has moderated. after averaging an annualized 3 percent over the first three quarters of 2023, and 5 percent in the third quarter, growth in real gdp appears to have slowed appreciably in the fourth quarter. the average of private - sector forecasts summarized by the blue