4  BIS central bankers’ speeches  Going one step further, investigation of the sources of this growth dispersion in the US and euro area economies reveals parallels even in the root causes of dispersion in economic performance. Both currency areas comprise regions that experienced a significant boom and bust cycle over the past decade.
It is this which provides the primary rationale for the regulation of the financial system by a public agency. This regulation is prudential in nature; it is intended to ensure that financial institutions are soundly manged and thereby to protect 4  their depositors, or other customers such as holders of insurance policies, and also to protect the overall stability of the financial system.