This department was also mandated to write this year’s Financial Stability Review. Getting macroprudential supervision right is indeed very much a work in progress. We are in the middle of a period of intense debate. Nevertheless, concrete progress has already been achieved in some areas.
In this regard, the reform agenda which is being implemented through the G20 summit process, largely under the guidance of the Financial Stability Board (FSB), deserves special mention. Given significant mutual interdependence as well as substantial cross-border effects, there is good reason to establish rules at the international level. Inconsistencies encourage regulatory arbitrage and thus tend to heighten systemic vulnerability.