WASHINGTON — As the Senate Banking Committee mulls taking away the Federal Reserve Board's bank supervisory powers, the central bank outlined its arguments for keeping the job.

In an 11-page paper to committee members Wednesday, the Fed said its knowledge of monetary policy and consolidated supervision qualifies it to oversee financial institutions, and its current supervisory role benefits its central bank functions.

"The Federal Reserve's involvement in supervising banking institutions of a variety of sizes generates information and expertise that significantly improve the Federal Reserve's ability to effectively carry out its central-bank responsibilities and that cannot be obtained reliably through other means, such as relying on reports from other supervisors," the agency said.

The document came as senators consider a regulatory reform bill by Chairman Chris Dodd that, in its initial form, would give the Fed's state member bank oversight powers to another agency. The proposal differs from an already-passed House bill that would retain the Fed as a bank supervisor and give it stronger systemic risk powers.

In a letter to committee members, Fed Chairman Ben Bernanke said the paper is meant to respond to lawmakers' requests for the agency's views on the matter. The document said no other agency can replicate the Fed's ability to apply its macroeconomic understanding to supervision.

"As a result of its central banking responsibilities, the Federal Reserve possesses expertise in those areas that is unmatched in government and that would be difficult and costly for another agency to replicate," the central bank said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.