Let me give you four examples of the issues we will be monitoring. The first, and most important, is the evolution of economic capacity. I said that our version of “home” is at the intersection of full capacity and 2 per cent inflation. But full capacity can be a moving target.
Banks will be under constant challenge to harness these forces to meet the ever-shifting competition. In such an environment, many existing rules and regulations will, if not modified, increasingly bind those banks seeking to respond, let alone innovate. Thus, there is a profound need for legislators and banking supervisors also to adapt to the changing realities.