advantages enjoyed by large firms ; possible diseconomies of scope resulting from firm bis central bankers ’ speeches complexity ; and the effect of market concentration and firm size on intra - and inter - firm diversification. as i noted earlier, there has also been a considerable amount of work on scale economies in commercial banking. 2 however, more needs to be done on these and other subjects. indeed, from a policy perspective, the value of some of the scholarship done to date may be limited. for example, if funding - cost advantages in fact derive from market perceptions that a very large firm was too - big - to - fail, the phenomenon is really one of competitive advantage grounded in moral hazard, not one of true efficiencies. similarly, the use of profitability of large firms as a surrogate for efficiency – as found in some studies – would be more helpful for policymaking if researchers find a way to control for the possibility that higher revenues are associated with market power or branding. let me illustrate with two examples how these issues of scale and scope economies relate to the increased regulatory emphasis on systemic risk. first is the federal reserve ’ s review of proposed mergers and acquisitions under the bank holding company act. of course, economies of scale and scope have always played a part in the analysis of the competitive effects of proposed mergers. but the dodd - frank act now requires that we also consider whether a proposed merger would lead to greater or more concentrated risks to financial stability. consider, for instance, how we would evaluate the financial stability effects of a proposed merger of two medium - sized institutions. among other things, we would need to assess the expansion of the acquiring institution ’ s systemic footprint. then, we would have to balance the potential increased costs across the system were the institution to fail against the potential benefits from either a lesser likelihood of failure or, with respect to essential financial functions, a greater capacity to step in and fill the gap if one of the firms ’ large competitors were to fail. in performing these kinds of analyses, we will draw on the extensive work on systemic risk we have already done in connection with our development of capital requirements, the designation of systemically important firms by the financial stability oversight council, and other matters. it is important to note that, while congress instructed us to consider the extent to which a proposed acquisition would pose a greater risk to financial stability, it clearly did not instruct us to reject an acquisition simply because there would be any increase in such risks.

benoit cœure : interview with rte tv interview with mr benoit cœure, member of the executive board of the european central bank, and rte tv, conducted by mr sean whelan on 31 january 2018. * * * mr coeure, as you know, the irish government have nominated philip lane for one of the positions that are coming up. how do you rate his chances? what sort of an executive board member might he make if he gets it? governor lane, he ’ s an outstanding economist. he ’ s a good colleague on the governing council of the ecb. now, as you know, the ecb has a very limited role in that process. we ’ ll give an opinion at a later stage and it ’ s really a political discussion ; that ’ s all what i can say. let ’ s move on to the potential threat of a currency war that was raised briefly at davos last week by the us treasury secretary. he was talking down the dollar. we ’ ve also seen a big post - brexit fall in the value of sterling and both of those things are closely watched here because about two - thirds of our trade are between sterling and dollar areas. are we on the verge of a currency war and people devaluing competitively? if we are, why shouldn ’ t the euro do it? let me be very clear here ; currency war is always a losing proposition, it ’ s something where everybody loses at the end. we have agreements in the g7, in the g20 that we should not target our exchange rates. we want to see exchange rates which reflect economic and monetary policy conditions in difference places and we ’ re not going to change it. we ’ ve seen quite some volatility recently. if that kind of volatility would lead to an unwarranted tightening of our monetary policy, we would have to reassess and consider. but i think the most important message here is : let ’ s keep to what we ’ ve agreed in the relevant fora, which is we ’ re not targeting exchange rates. well, interest rates – as you know, a perennial topic, the monetary policy of the ecb – people watching this programme tonight would be most interested knowing when the ecb is likely to raise interest rates and whether that ’ s going to have knock - on effects particularly for their mortgage costs. we have a clear sequence here and that ’ s something we all agree on in the governing