The Fed chairman's comments come as Congress moves closer to sending President Barack Obama a final legislative package that revamps the nation's financial structure to prevent a replay of the recent financial crisis.
Bernanke welcomed key parts of that package in remarks prepared for delivery to a conference in New York. At the same time, though, Bernanke emphasized that the Fed is moving ahead on its own reforms.
For instance, the Fed is working to strengthen capital requirements for banks so that they'll have bigger and better cushions to protect against any potential losses. And, the Fed is collecting more information on linkages among financial companies to better identify potential channels of financial contagion.
One of the lessons learned from the crisis is that the Fed can't focus solely on the safety and soundness of individual banks, but rather on the health of the financial system as a whole, Bernanke said. The Fed has already moved to examinations that take this broader-picture approach.
"Regulatory agencies must thus supervise financial institutions and critical infrastructures with an eye toward overall financial stability as well as the safety and soundness of each individual institution and system," Bernanke said.
"Indeed, the crisis has demonstrated that a too-narrow focus on the safety and soundness of individual institutions or systems can result in a failure to detect and thwart emerging threats to financial stability that cut across many firms or markets," he explained.
Bernanke embraced provisions contained in both the Senate- and House-passed financial overhaul measures that would create a council of regulator - which includes the Fed - to police for risky practices that could endanger the financial system. Concentrating all such powers within a single agency, he said, could create "regulatory blind spots."
The council, however, shouldn't be involved in rule-writing and supervision, Bernanke said. Those functions should stay at the relevant regulatory agencies, with the council acting in a "coordinating role," he said.
Bernanke also welcomed provisions in the House and Senate bills that would allow for the safe dismantling of a big financial firm, whose failure could put the economy in jeopardy. The mechanism is similar to how the Federal Deposit Insurance Corp. shutters failing banks.