For direct access to information, proximity both to the financial markets and to the institutions is an advantage. Supervisors, who are active in the markets themselves and know the market participants from their own business relationships, possess major additional sources of information.
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.