24 of Keynes, J M (1936), The General Theory of Employment, Interest and Money, Macmillan Cambridge University Press. BIS central bankers’ speeches  1  Having monetary, macroprudential, and microprudential policy under one roof makes gains from trade possible. It is our duty to exploit complementarities, synergies and economies of scope to maximise our impact by working together. To do so, we need research. And to some extent, research needs us. The need for research The way central banks have sought to achieve their objectives – the practice of central banking – has frequently moved ahead of the theory of central banking. Theory, in turn, subsequently catches up, and enriches and refines practice. The history of central banking is replete with examples. Tacit knowledge has often been more instrumental in determining policy outcomes than insights from formal research. Sometimes this works, as in Bagehot’s “dictum” (to lend freely at a penalty rate against good Montague Norman’s “never explain, never excuse”. 2 Research has meant that some modes of operation, like Norman’s, have rightly fallen by the wayside. It has helped nuance others, like Bagehot’s. And it guides us as to which practices to retain, reinforce and enhance, and which should be discarded. The practice of monetary policy in the Great Moderation is another example. It informed theorising and research on Inflation Targeting. And, in turn, through trial, error and refinement, research has helped inform policy with empirical insights and workhorse models.
Another issue that may be relevant here is the implication of a firm that has a balance sheet that looks like that of a bank but does not have direct access to the lender-of-last resort. Finally, and especially in light of the issues just raised, I think it is important for me to emphasize that the bank supervisors have expressed a clear willingness to listen to what the banking community has had to say on the issues involving electronic and Internet banking. Regulation E, promulgated by the Board of Governors, implements the Electronic Funds Transfer Act of 1978, and establishes primarily for consumer protection purposes the basic 7  See Royal Bank of Canada, et al., 83 Fed. Res. Bull. _____, (Order approved Dec. 2, 1996). Integrion also stated that it will not function as an Internet service provider, but will provide a secure electronic link to one. 9 See Notification to the Board of Governors Regarding Investment in Marketware International Inc. of Toronto Dominion Bank (Dec. 19, 1996). 10 See OCC Interp. Letter No. 742 (Aug. 19, 1996). 8  BIS Review 17/1997  -5-  rights, liabilities, and responsibilities of consumers who use, and financial institutions who offer, retail electronic funds transfer services.11 Among the protections provided are required disclosures, error resolution procedures, and loss protection.