U.S. Treasury Secretary Janet Yellen said Wednesday that seeing a greater concentration among the largest banks would not be desirable and she believes it is important to maintain a diverse banking sector.

A mix of large banks, regional banks and mid-sized community banks would be the healthiest option, Yellen said.

"Banks of different types serve different needs. And I think that's a great strength of our banking system. So in general, seeing greater concentration among the largest banks is not something that's desirable," Yellen said in a virtual appearance at the Wall Street Journal's CEO Council Summit in London.

"We want to make sure that there's healthy competition throughout the economy, including in the banking system."

Bank watchdogs have been under intense scrutiny after recent bank collapses triggered a rout in global banking shares and set off fears of contagion.</p> <p>Large U.S. lenders will bear most of the cost of replenishing a deposit insurance fund that was drained of $16 billion by the collapse of Silicon Valley Bank and two other lenders, although mid-sized banks will also be on the hook, the Federal Deposit Insurance Corporation said this month.