As regulators, we need to understand how banking organizations manage and control risks and the full implications of their practices for the financial safety of depository institutions. By doing so, we can do much to protect our own interests while still recognizing and accommodating the business needs of banks. In developing our laws and regulations we need to work together, for sure.
But perhaps more importantly, we need to understand the market forces and incentives that banks face. If we keep those factors in mind in developing our individual rules, we may go far in developing regulatory systems that are both compatible among countries and less intrusive to the institutions we oversee. BIS Review 11/1997