Already from these three points we see how the lessons learnt lead us to the systemic dimension of supervision and regulation. The current regulatory challenge So let me turn to the challenges of the current regulatory reform to discuss what is needed to prevent or contain financial instabilities and systemic crises in the future.
At the Federal Reserve, we've recently looked at measures of asset quality - problem assets, chargeoffs, and provisions for loan losses - and related them to the economic cycle, measured as growth in real gross domestic product.