Speaking at the Federal Reserve Bank of San Francisco's Symposium on Asian Banking and Finance yesterday, Mr Stevens discussed the Basel III regulations, the issue of shadow banking and the concept of 'global systemically important banks' being too big to fail.
"There are a number of issues on which we need to make further progress by the time of the G20 Leaders Summit in November," he said.
Much of this work is not new regulation – rather, the fulfillment of commitments already made, said Mr Stevens.
"What about beyond that? In particular, at what point does the agenda for better, and frankly more, regulation reach a natural conclusion?" he asked.
"When does our focus shift from regulatory redesign, under the duress of a crisis, to operating the system in (hopefully) more normal times? And to evaluating how the strengthened regulations are working?" said Mr Stevens.
Global regulators are looking to manage the build-up of "channels of contagion" in the financial system that could lead to another crisis, he said.
"This does not equate to a desire to eliminate all risk. In fact, risk-taking is, to a point, good. We want it to occur. That is how society advances," said Mr Stevens.
"A problem right now, arguably, is that there is not enough genuine entrepreneurial risk occurring – judging by the low levels of private capital spending in many advanced countries," he said.
But that isn't to say there is not enough financial risk-taking occurring at present, said Mr Stevens, with "various people" arguing there is too much of that at present.
"We do need, however, risk to be recognised, and we need to be clear about who bears it," he said.
"[But] we are not trying to extend the regulatory ‘perimeter’ indefinitely. There will always be some risky activity around the fringes of the system, and there is nothing particularly wrong with that," said Mr Stevens.
"Those who seek high returns, and are prepared to accept the risk, should be allowed to do so. There is value in that occurring," he said.
"This is perhaps the greatest regulatory challenge for the future: assessing when an activity that is technically outside the ‘perimeter’ might be about to present a threat to overall stability," said Mr Stevens.
