Banking supervision refers to the regulatory process that ensures financial institutions, such as banks, operate safely and soundly. This involves monitoring their activities to protect depositors and maintain the stability of the financial system. Supervisors assess banks' financial health, risk management practices, and compliance with laws and regulations. The primary goal of banking supervision is to prevent bank failures and protect the economy. Regulatory bodies, like the Federal Reserve in the United States or the European Central Bank in Europe, conduct regular examinations and audits. They also enforce rules to ensure that banks maintain adequate capital and liquidity to withstand economic challenges.