Abstract

Three subjects raised in Chapters 8 and 9 deserve further elaboration. First, what degree of independence should the supervisory authority have? Or, in other words, what should be the relationship between the supervisory authority and the political authority? To be effective, supervision has to be independent from political considerations for reasons similar to those that justify similar independence in monetary policy. As is well known, there is a growing consensus that the monetary authority should be independent from day-to-day political interference. An analogous, even stronger case may be made with respect to supervision, where a number of very complex issues must be addressed, and delicate judgments must be made.