- all solution will probably not be reached, given the country - specific financial conditions and institutional arrangements. however, this does not necessarily exclude looking into the arguments for or against either alternative. as i already said, i believe that it is better to have supervision integrated in the central bank. first of all, the ongoing complex challenges to financial and economic stability call for identifying, using and corroborating tons of information in order to articulate the adequate policies. the central bank relies on its database and expertise, which are prerequisites for managing such a challenging environment. beyond this major advantage, there are also other benefits of such an institutional arrangement. independence from political influence is essential for effective supervision. and central banks are institutions enjoying a high level of independence that a newly - established government agency would not be able to gain, at least in the short run. besides, clearly acknowledging the links between price stability and financial stability means that they need to be taken into account when formulating the monetary policy. moreover, as benoit cœure pointed out, data collected and analyses conducted as part of banking supervision provide valuable information about the financial sector and may feed into the assessment of the state of the economy, being useful for the monetary policy decision - making process. of course, literature identifies some disadvantages of integrating supervision in the central bank. the risk of this arrangement resulting in a too loose monetary policy, due to the conflicting objectives, which i have already referred to, is an important drawback. however, as beck and gros stressed in an article from 2012, with the rise of macro - prudential regulation as an additional tool, it is not clear whether price and financial stability still conflict with each other. bis central bankers ’ speeches another disadvantage is that the reputation and / or the independence of the central bank might be undermined : if its decisions and actions in the area of supervision and resolution are perceived as wrong or suboptimal, this may negatively affect the credibility of the monetary policy, as it is conducted by the same institution. moreover, the temptation of politicians to capture the central bank may rise, as it has much more power than in the case when its only mission is to deliver price stability. the various arrangements on assigning banking supervision also have a bearing on the design of the national macroprudential authority. depending mainly on who conducts the supervision of banks, different institutional solutions are adequate for this authority : it may be represented by a committee or board comprising representatives of

out that the nbr shifted from an internal auditors ’ commission to the auditing of financial statements by external auditors as early as 2001, while the following year saw the establishment of the audit committee as a substructure of the nbr board ( at a time when not even the ecb had such a committee in place! ). in addition to the audit committee, the nbr ’ s internal control system includes several control layers. in fact, there are three lines of defence against any factors that might jeopardise the fulfilment of the nbr objectives. bis central bankers ’ speeches first of all, the national bank of romania takes a functional approach to risk management, meaning that each organisational unit has primary responsibility for identifying, assessing and managing the risks associated with its own activities and operations. the risk management process is an integral part of the nbr ’ s internal control system and represents the bank ’ s first line of defence. each organisational unit implements operational control procedures within its area of responsibility, in accordance with the levels of risk tolerance set in advance by the executive management. furthermore, the nbr applies the approach known as the “ chinese wall ”, which separates the departments in charge of monetary policy formulation and implementation, on one hand, from the departments entrusted with other statutory tasks, on the other. the second line of defence is functional on certain business segments with high - risk financial exposure, e. g. international reserve management. this line of defence monitors compliance with the risk limits approved by the bank ’ s executive management and reports any breach. a major role in this line of defence is played by the decision - making / advisory committees within the central bank. apart from the two committees dedicated to monetary policy and supervision that i have already mentioned, particularly significant is the foreign reserve management committee. in addition to the risk monitoring by the operational structures, the nbr ’ s internal audit department – which functions as the third line of defence – examines the overall controls in place and determines whether they are properly designed and functional, so as to ensure the reliability and integrity of financial and operational information, the effectiveness of the activities carried out, asset protection, as well as compliance with applicable legal and contractual provisions. 5. different institutional arrangements for banking supervision and financial stability as we all know, the responsibility for banking supervision rests in some countries with the central bank, whereas in others it lies with a distinct authority. both options are valid and a one - size - fits