BIS Review 42/2001  1  Reducing the broad objectives of bank supervisors and regulators to two sentences may be difficult, given the many demands placed on them in overseeing a business as dynamic and important as banking. Yet, in some respects, these statements could be simplified still more: To promote safety and soundness while allowing banking institutions to innovate and compete.
There are clearly some tensions in these goals. The hard part, of course, is in implementing these concepts on a daily basis. Can we always tell, for example, what is “unsafe and unsound” when we see it, and at what point do we interfere with management’s judgment when we disagree? What is “efficient competition” when banks have access to a subsidized safety net?