But one thing I’m certain of is that a lot has changed in those five years – and much of it for the positive in terms of addressing some of the key weaknesses that led to the crisis. Where progress has been made I thought I’d start first by reflecting on several areas where we’ve seen progress. Importantly, the balance sheet repair that was necessary is underway. •  Banks are building capital – both the quantity and the quality of capital have improved markedly in the past several years. For example, by some measures, the largest banks in the U.S. have more than doubled capital levels over the past four years. •  Banks are also building liquidity, and liquidity levels far exceed those that most firms had going into the crisis in 2008. •  While progress on both fronts is somewhat uneven across jurisdictions, there are efforts underway, including through such mechanisms as the Basel rulemaking process and EU initiatives, to continue to make bank balance sheets more resilient to stress in the future. In the area of recovery and resolution, with the second round of plans in for the largest firms (and the first round in or due shortly for the remaining firms), a lot of learning has happened through this process.
The forum provides the opportunities for policy dialogues, exchange of views and concerns, and information updates, among other things. This is the major operational arrangement that we have put in place to make the separate authorities model work for us. No doubt other operational arrangements can be put in place to make the integrated model work as well. Having said that, let me add another dimension to the issue of supervisory arrangement – one that is related to central bank’s other key function, namely, monetary policy. I believe that supervisory policy and monetary policy can be arranged in such a way that they are complementary and supportive to each other. I also believe that the often-cited conflicts of interest between the two roles, if performed by the same institution, may have been overstated somewhat. If there are policy conflicts, these conflicts will have to be resolved regardless of who is in charge of supervision. Then, would it not be more efficient if the conflicts could be internalized and resolved within an institution? In fact, many possible mechanisms exist to help ensure full accountability for each role, thereby minimizing potential conflicts while getting synergies from having the two roles under one roof. The arrangement we use In Thailand, as I alluded to earlier, is the establishment of two separate policy boards that include outside experts.