That said, Roger Ferguson, a former Member of the Fed Board and Chairman of the FSF,  BIS Review 49/2007  5  argues that the well established global network among central banks, such as through the BIS, gives central banks a comparative advantage in informal information sharing and cooperation 5 . Which role remains for the central bank? Ensuring jobs for the central bank staff is not a valid reason for retaining bank supervision in the NCB. Hence, the question is: Which would be the primary tasks of the NCB if supervision is moved out? Of course, the task of conducting monetary policy would remain with the NCB. The NCB will also run the large-value payments system, or at least exercise oversight over it. In addition, the NCB should always have the responsibility for the oversight of overall stability in the financial system. Financial stability is a necessary condition for efficient monetary operations and is in itself an important component in a country’s sustained macro economic growth. Since the NCB will still be the lender-oflast-resort the knowledge gained from its financial stability analysis will be crucial in a crisis situation. But the NCB cannot perform an efficient financial stability analysis, nor act as lender-of-last-resort without close cooperation with the supervisory authorities. The other authorities will also benefit from the stability work by the NCB. Conclusions Let me try to sum up. My first conclusion is to use the American expression “If it ain’t broke don’t fix it”.
There are arguments against changing the supervisory structures in the near term. The first one is the flip-side of the argument above. Also the banks are getting larger and more complex. In many countries they still dominate the financial sector and the payments system. Hence, society has a clear interest in strong banking supervision to avoid costly bank failures. We should take into account that banking supervision in many countries functions quite well, while supervision of the other financial sectors is much weaker. Major structural changes involving bank supervision will therefore hamper the conduct of such supervision for a long time due to the focus on the transition rather than on the operations. There is also an obvious risk that qualified staff will leave bank supervision due to the less attractive work prospects outside the NCB. For instance, government salaries and other benefits are usually not as good and it is less prestigious to work outside the NCB. The result would be weaker bank supervision without compensating improvements in other sectors. There are other ways of meeting the challenge. Many countries have instituted arrangements for closer cooperation between the supervisors. Memorandas of Understanding have been drafted so that information may be shared without legal or other impediments. Joint forums have been established where representatives from the different supervisory authorities meet regularly. Cross directorships imply that high level supervisors sit on each others’ Boards and can inform themselves of developments.