of the framework in its finalization. several of the remaining issues involve quite a number of calibrations based on the accumulation of very technical and expert considerations, such as the measurement of risk - weighted assets. the outcome of these considerations would have a significant impact on the determination of required macro capital and the risk - taking behavior of financial institutions. i would like to emphasize that the calibration should be finalized in such a way that the amount of risk - weighted assets and required capital as a whole would be maintained at an appropriate level, while taking a holistic approach in examining effects on the institutions. the second point is the necessity of a review of the effects and impacts of these regulatory reforms after their implementation. reforms of international financial regulations to date have been drastic enough that it is no exaggeration to refer to them as a “ fundamental re - design. ” looking at individual countries, large - scale financial and structural reforms are underway, as typified by the volcker rule in the u. s. the extent of the effects and impacts of these regulatory reforms on international financial intermediation and flow of funds in the financial sector as a whole remains unknown, and therefore requires close monitoring. from a long - term perspective, in order for the financial system to ensure stability and in turn contribute to sustainable economic growth, financial institutions need to be sufficiently profitable through active and innovative financial intermediation. in this regard, it is important to remove any regulatory excess, inconsistency among regulations, and uncertainty regarding the regulatory environment. concluding remarks that brings me toward the end of my speech. topics for discussion regarding macroprudential policy go beyond those i have raised today. one such topic regards the effective institutional arrangements for macroprudential policy. needless to say, there is no such thing as a universally optimal set of arrangements, as financial and economic structures as well as legal frameworks differ from country to country. moreover, the desirable form of arrangements would vary depending on the kind of macroprudential measures each country intends to utilize. looking at the recent developments in countries with multiple regulatory and supervisory authorities, there has been quite a number of movements to establish new bodies or councils in charge of macroprudential policy. in japan, the financial services agency ( fsa ) - which is legally authorized to conduct industry - wide supervision and inspections - and the bank - which contributes to financial system stability, such as through the “ lender of last resort ” function are making

too long or offering too wide a safety net through the lender - of - last - resort function – that inadvertently add momentum to such developments. we have, undoubtedly, made important progress in the various international fora, including the basel committee, of which nout wellink held the chair until his retirement. still, much work remains, for example the potential for the shadow banking sector to pick up those risks pushed out of the formal banking sector as a result of recent regulatory tightening. i hope that today ’ s discussions will give us fresh ideas on how to take on the many remaining challenges with regard to aligning incentives and practices of financial institutions with socially desirable outcomes. thank you for your kind attention. bis central bankers ’ speeches