I will begin by outlining, very briefly, some of the key trends affecting the banking and financial sector. I will then focus on what I see as the most important challenges that these trends pose for bank supervisors, and suggest some directions that I believe we should consider when thinking about how bank supervision should evolve over time.
This experience calls into question whether we have accurately measured the feedback of wealth on consumption. When we look back on this period, we may determine that there are periods in which the “wealth effect” is noticeably greater than the 2-to-4 percent that appears to be the norm.