Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

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

02/22/2013 | 06:50pm US/Eastern
   By Michael R. Crittenden 
 

WASHINGTON--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.

Write to Michael R. Crittenden at michael.crittenden@dowjones.com

React to this article
Latest news
Date Title
3m ago Aussie Banks In Class Action For Unlawful Fees
30m ago J SAINSBURY : Medieval mayhem as Lord is pelted with fish
30m ago RENAULT : Life & Times
30m ago ROYAL MAIL : Staff red letter day ; NEWS IN BRIEF
32m ago POUNDLAND : Treat yourself ; on the sofa your weekend...Five of Weekend's Christmas 'must have' buys...
36m ago ROYAL HOTEL : FESTIVE FUN: Father Christmas visited
38m ago PEUGEOT : DRIVER'S EVASIVE ACTION SAVES FURTHER TRAGEDY ; Tragic motorist swerved into hedge to avoid oncoming trafficDriver's evasive action saves further...
38m ago BANK OF CHINA : sees high probability of further rate cut in 2015
38m ago NISSAN MOTOR : Tributes to man trapped by van ; /notices
38m ago MOTHERCARE : There will still be place to feed baby after store shuts
Latest news
Advertisement
Hot News 
DENDREON : Entry into a Material Definitive Agreement, Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits (form 8-K)
DIXONS CARPHONE : *exane bnp raises dixons carphone price target to 510 (450) pence - 'outperform'
BERKELEY MINERAL RESOURCES : Obsidian IR
NATURE : Warns 2014 Results To Be "Materially" Below Market View
FINISH LINE : Reports Third Quarter Fiscal Year 2015 Results
Most Read News
1d ago SYSCO : Poised to Complete US Foods Deal (Report)
8h agoDJDEUTSCHE TELEKOM : in Talks to Sell T-Online to Springer - Report
1d ago SIEMENS : surpasses 100,000 milestone for energy-efficient industrial motors
8h agoDJSiemens CEO Eyes Health-Care Expansion - Report
1d ago U.S. labor agency files complaints against McDonald's
Most recommended articles
1h ago Last U.S. holiday shopping weekend off to solid start
3h ago North Korea denies hacking Sony, U.S. stands by its assertion
3h ago ECB'S COENE SUPPORTS GOVERNMENT BOND PURCHASES : newspaper
3h ago U.S. STANDS BY ASSERTION THAT NORTH KOREA BEHIND SONY ATTACK : NSC spokesman
4h ago COMCAST : DISH, Comcast SportsNet reach deal in regional dispute
Dynamic quotes  
ON
| OFF