Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

Fed's Tarullo : Central Banks Should Consider Role of Financial Stability

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/23/2013 | 02:21am CEST

(Adds comments from Mr. Tarullo in final paragraph.)

 
   By Michael R. Crittenden 
 

Central bankers should consider what role financial stability should play when making monetary-policy decisions, both in preventing and responding to crises, Federal Reserve Gov. Daniel Tarullo said Friday.

Speaking in New York, Mr. Tarullo suggested there was "ample justification" for central bankers to consider financial stability when making decisions about monetary policy because of the large-scale effect a financial crisis can have on growth and unemployment.

"We need to consider carefully the view that central banks should assess the effect of monetary policy on financial stability and, in some instances, adjust their policy decisions to take account of these effects," he said in a speech.

Mr. Tarullo, the Fed's point man on financial regulation, also reiterated concerns he has expressed previously about oversight of the so-called shadow-banking system. While regulators have made progress on addressing the problem of "too-big-to-fail" firms, efforts to address risks posed by short-term funding markets have lagged.

"Except for the liquidity requirements agreed to in the Basel Committee, however, the liability side of the balance sheets of financial firms has barely been addressed in the reform agenda," Mr. Tarullo said.

He laid out a laundry list of international regulatory efforts he expects to see completed or having had progress in the coming months, expressing confidence regulators will be able to finalize efforts to impose capital surcharges on systemically important banks. Regulators should also finish work within the next six months on designating systemically important nonbanks, such as insurance companies, he said.

One area where he urged caution, however, is a liquidity rule known as the "net stable funding ratio" that has been in a state of limbo as regulators decide whether to press forward with the changes. Intended to keep banks from relying too heavily on short-term funding to help finance longer-term loans, the rule has been criticized by the banking industry.

Mr. Tarullo said more analysis should be done before the rule is finalized.

"I think we may be better advised to take the opportunity of this review to examine whether there are approaches that might address more directly the vulnerabilities for the financial system created by large nondeposit, short-term funding dependence at major financial institutions," he said.

In response to a question from an audience member at an event sponsored by Cornell University's international law journal, Mr. Tarullo said central bankers face a challenge of balancing policy remedies to a systemic strain when the economy itself is still fragile.

"We're still in a slow-growth environment" in the U.S., Mr. Tarullo said.

Mr. Tarullo also said regulators have "tentatively discussed" proposals to require minimum so-called haircuts for participants in securities financing transactions. He said one means of doing so would be to attach the requirements to instruments or transactions, rather than firms, but offered little other detail.

--Christian Berthelsen contributed to this article.

Write to Michael R. Crittenden at [email protected]

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
10:31aComcast backs Sky bid with £23 billion of loans
RE
10:28aRANDY VULAKOVICH : DCED Conducting Statewide Community Survey
PU
10:28aGENSCAPE : Expands Coverage of the Louisiana Crude Supply Chain
PU
10:23aMINISTRY FOR FOREIGN AFFAIRS OF KINGDOM OF SWE : To lead on climate, countries must commit to zero emissions
PU
10:21aQatar Airways confirms 'substantial' annual loss, blames regional row
RE
10:18aHuawei Under Criminal Investigation Over Iran Sanctions--Update
DJ
10:16aU.S. Department of Justice probing Huawei for possible Iran sanctions violations - WSJ
RE
10:16aBrazil Posts March Current Account Surplus of $798 Million Vs $283 Million in February
DJ
10:14aAmazon.com plays catch-up in Brazil as local rivals thrive
RE
10:13aCNSX MARKETS : MGX Minerals acquires zinc air battery developer ZincNyx Energy Solutions Inc.
PU
Latest news "Economy & Forex"
Advertisement