Phillips, Susan M., 1944- and Board of Governors of the Federal Reserve System (U.S.), 1935- "Supervisory Challenges Related to New Financial Products." Remarks to the Annual Southern Banking Law and Policy Conference, Sponsored by College of Law, Georgia State University and the Federal Reserve Bank of Atlanta, Atlanta, Georgia, October 6, 1995, https://fraser.stlouisfed.org/title/954/item/37110, accessed on April 25, 2025.

Title: Supervisory Challenges Related to New Financial Products : Remarks to the Annual Southern Banking Law and Policy Conference, Sponsored by College of Law, Georgia State University and the Federal Reserve Bank of Atlanta, Atlanta, Georgia

Date: October 6, 1995
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image-container-0 For release on delivery 1:00 p.m. EDT October 6, 1995 Supervisory Challenges Related To New Financial Products Remarks by Susan M. Phillips Board of Governors of Federal Reserve System to the Annual Southern Banking Law and Policy Conference Sponsored by College of Law, Georgia State University and The Federal Reserve Bank of Atlanta Atlanta, Georgia October 6, 1995
image-container-1 I. Introduction It is a pleasure to be here and participate in your discussions of current business, and policy issues facing the banking industry. In particular, I'm especially happy to have the opportunity to address the supervisory challenges posed by new financial products. As you know, technological and financial innovation is spawning new and increasingly complex ways for banks and other institutions both to take and to manage risk. Moreover, securities, derivative contracts, loans and other financial instruments are becoming increasingly interchangeable and harder to differentiate using traditional benchmarks. In this environment, supervisors face an important challenge in adapting their existing supervisory regimes to recognize and take advantage of advances in risk measurement and management. This challenge applies to supervisors of all types of financial institutions, not just bank supervisors. Indeed, the blurring of products, business lines and other traditional institutional distinctions is placing increasing pressure on all financial regulators to achieve some form of harmonization or convergence in supervisory regimes. Failure to do so can lead to regulatory arbitrage and its associated market inefficiencies. Today I would like to discuss areas where supervisors are making significant progress to meet these challenges. I also hope to identify areas where there is still work to be done.
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Date: October 6, 1995
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