It limits the effects of financial shocks on the real economy; it strengthens monetary transmission channels; and it reduces unintended consequences of monetary policy actions. But the reverse is also true: a weak financial system can cost monetary policymakers many sleepless nights.
Second, against the background of a monetary environment that is likely to remain accommodative for some time, we therefore need to further strengthen the global financial system. And to do that, we need to further improve the regulatory framework in the coming years. I will argue that the financial system is in much better shape than a decade ago, but important risks still remain.