Hence it is imperative that the public fully understands what the central bank is trying to do and what the implications of its actions for the future course of the economy are. Let me give you an example. The rate of inflation is a key variable in the economy.
Since innovation is one of the key benefits of shadow banking, innovation is also a fact of life in regulating the sector. Shadow banking has been known to reinvent itself and will continue to do so in response to regulation. We will need to develop and adopt principles that are broad-based enough to encompass new activities. Risk is inherent in the global financial system.