It is precisely the central banks which maintain these permanent contacts – not only for their monetary policy operations but also because of their role in payment systems. Central banks are therefore in a position to identify problems within the financial system earlier than pure bank supervisors are able to.
The central bank’s own financial market analyses, which are needed for monetary policy in any case, also provide valuable information for the purposes of system supervision, and can help to identify irregularities or tensions within the financial system at an earlier stage. Moreover, central banks are able to perform the necessary interpretation of prudential data within the context of the economy as a whole.