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Is banking supervision central to central banking?

Author

Listed:
  • Joe Peek
  • Eric Rosengren
  • Geoffrey M. B. Tootell

Abstract

Whether central banks should play an active role in bank supervision and regulation is being debated both in the United States and abroad. While the Bank of England has recently been stripped of its supervisory responsibilities and several proposals in the United States have advocated removing bank supervision from the Federal Reserve System, other countries are considering enhancing central bank involvement in this area. Many of the arguments for and against these proposals hinge on the effect this change would have on the ability of the central bank to conduct monetary policy. We find that confidential supervisory information on bank ratings significantly improves forecast accuracy of variables critical to the conduct of monetary policy, which supports the argument that central banks should have bank supervision responsibility.

Suggested Citation

  • Joe Peek & Eric Rosengren & Geoffrey M. B. Tootell, 1997. "Is banking supervision central to central banking?," Working Papers 97-3, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:97-3
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    Cited by:

    1. ., 2002. "The Eurosystem, the euro area and financial stability," Financial Stability Review, Banque de France, issue 1, pages 59-67, November.
    2. Ampudia, Miguel & Beck, Thorsten & Beyer, Andreas & Colliard, Jean-Edouard & Leonello, Agnese & Maddaloni, Angela & Marqués-Ibáñez, David, 2019. "The architecture of supervision," Working Paper Series 2287, European Central Bank.
    3. C. H. Furfine, 2001. "The interbank market during a crisis," BIS Working Papers 99, Bank for International Settlements.
    4. Athanassiou, Phoebus, 2011. "Financial sector supervisors' accountability: a european perspective," Legal Working Paper Series 12, European Central Bank.

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