4  BIS Review 21/2010  sources of funding are not available. The Federal Reserve’s ability to inject liquidity into the financial system is critical for preserving financial stability and for supporting depositories’ key role in meeting the ongoing credit needs of firms and households. Regulatory reform Strengthening our financial regulatory system is essential for the long-term economic stability of the nation.
Among the lessons of the crisis are the crucial importance of macroprudential regulation – that is, regulation and supervision aimed at addressing risks to the financial system as a whole – and the need for effective consolidated supervision of every financial institution that is so large or interconnected that its failure could threaten the functioning of the entire financial system.