’ s supervisory role. given the importance of 6, 800 regional and community banks located in almost as many communities across this country, it is inconceivable to me that the central bank of the united states would not have a role in their oversight, through the supervision of state member banks and bank holding companies. the federal reserve system was designed by its founders with the goals of it supervising a broad cross section of u. s. banks, assuring equitable access to the federal reserve liquidity facilities regardless of institutional size or location, and contributing to the stability of the financial system – not only on wall street but on america ’ s main street. it does this job well. in the crisis of the ‘ 80s, which affected both large and small banks, banks supervised by the federal reserve proportionately imposed the least losses on the fdic when they failed relative to banks supervised by other federal agencies. in addition, the federal reserve ’ s role in supervision of banks and bank holding companies provides it critical information on local economies in places such as muskogee, okla. ; santa fe, n. m. and scottsbluff, neb. and to answer the question : yes, our role in regional and community bank supervision supports our responsibilities as members of the federal open market committee, by expanding our understanding of local and regional economies. stripping the federal reserve of its responsibility for supervising regional and community banks and bank holding companies should be unacceptable to anyone who cares about equity in the nation ’ s banking system, largest to smallest bank, and the nation ’ s regional and local economies. confining the federal reserve ’ s supervisory role to only the largest firms will, i fear, inadvertently make the federal reserve the central bank to the largest firms while disenfranchising the other 6800 banks. the map tells the story. when congress created the federal reserve nearly a century ago, it gave us a decentralized system that spanned the continent. the explicit purpose for this structure was to better balance the interest of main street against those of wall street. recent experience confirms that this structure is as important today as then, perhaps more so. community banks are important to the banking system and to the economy, and therefore continue to be important to the federal reserve. i have said before but it deserves repeating : it would be a tragic irony if the outcome of this crisis is a gain in power for the largest firms at the expense of the other 6, 800 regional and community banks

axel a weber : lessons learnt – the reform of financial regulation and its implications speech by professor axel a weber, president of the deutsche bundesbank, to the university college london ( ucl ) economics and finance society, london, 10 march 2011. * 1. * * introduction ladies and gentlemen i would like to thank you for giving me the opportunity to share with you some thoughts on the challenges of reforming financial regulation. the financial crisis that we have been experiencing over the past four years has held a mirror up to all of us – academics and policymakers alike. it has provided new insights and opened up new perspectives that will have a lasting impact on both economic analysis and economic policy. the overhaul of financial regulation is a case in point. the reforms we have embarked on will lead to a much more elaborate regulatory framework and to a more resilient financial system – a perspective that is of particular relevance for the united kingdom, which hosts one of the most important financial sectors worldwide. just to give you an impression of the numbers : in the united kingdom the financial sector contributed 9½ % to gross value added in 2009, compared to 5½ % in the euro area and just 4 % in germany. looking back to the origins of the crisis, there is little doubt that an inadequate regulatory framework was its most important cause. thus, our task is to strengthen the rules to allow for a more stable financial system. in this context, it is essential that the reforms are not just guided by the lessons learnt from the current crisis, since the next one might emerge from a completely different angle. at the same time, it is imperative that the reform is internationally harmonised. the financial system is global, and to prevent regulatory arbitrage national frameworks have to satisfy certain common standards. acknowledging the need for a global approach, the g20 has drawn up a comprehensive plan to reform international financial regulation with the general objective of making the financial system as a whole more resilient to potential shocks. nevertheless, we have to bear in mind that the main task of the financial system is to support the real economy and to promote economic growth. this is the backdrop against which the reform of financial regulation has to be discussed. but let us begin by taking a look at the envisaged reforms before tackling the question of how they might influence the real economy. 2. the reform of financial regulation … 2. 1 towards more stable banks : basel iii the natural starting point for a reform of financial regulation is the