In many ways, however, the banking and financial system has changed dramatically in the past decade both in terms of its structure and the diversity of its activities. Risk management practices have also advanced, helped by technological and financial innovations.
I believe that both bank supervisors and the banking industry have learned important lessons from the experience of the past ten years, specifically about the need to actively monitor, manage, and control risks. Through its supervisory process, the Federal Reserve seeks to maintain a proper balance: permitting banks maximum freedom, while still protecting the safety net and maintaining financial stability.