In my judgement, the central bank is in a unique position to balance the complex and sometimes conflicting objectives of financial stability and a growing economy. The Fed is less likely to engage in an unnecessarily restrictive or, for that matter, excessively loose, supervisory policy than is an agency focused either solely on bank safety and soundness or solely on growth.
Finally, the U.S. central bank, because of its extensive and well-established relationships with foreign central banks is ideally positioned to engage in coordinated action in managing international financial crises and in supervising institutions that have a substantial international presence. The on-going crisis in Asian financial markets is our most recent example of the need for such coordination of supervision.