In particular, strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim. Today, I would like to talk about four key elements of such a strategy. First, we must address the problem of financial institutions that are deemed too big – or perhaps too interconnected – to fail.
Thirdly, financial inclusion can help to deepen financial markets, for example by attracting more savings into banks, although it is not the only channel through which financial markets can be deepened. Empirical research has shown that a deepening of the financial system supports higher levels of private investment and economic growth over the long term.