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

Latest news
Date Title
<1m ago RESEARCH AND MARKETS : Global Scintillator Market 2013-2020 - Composition of Material, Application, End Product & Geographic Analysis of the $479 Million Market
<1m ago ALLIANT INSURANCE SERVICES : Promotes Michael Heid to Executive Vice President and Managing Director
1m ago MWANA AFRICA : Corrected Update September 2014 Quarter
1m ago KESKO SER'A' : financial reporting in 2015
2m ago SGS SOCIETE GENERALE DE SURVEILLANCE : certificates medical devices company Rocialle to SA8000® - the pre-eminent standard in labour practices
3m ago UKTI UK TRADE & INVESTMENT : wins United Nations award for attracting foreign investment
3m ago INFRASORS : Trading update for the six months ended 31 August 2014
3m ago RUSS INVEST IK : Fixed income daily 20102014
3m ago POLARCUS : Minutes from Extraordinary General Meeting
3m ago ROYAL BANK OF SCOTLAND : Key moments of trust
Latest news
Advertisement
Hot News 
PRESIDENT ENERGY : Oil Discovery in Paraguayan Chaco
NUTRECO : SHV and Nutreco announce a recommended cash offer of EUR 40 per share for all shares of Nutreco
XEROS TECHNOLOGY : Further incentive programmes from us
SAP SE : October 20, 2014SAP Announces Third Quarter and Nine Months 2014 Results ›
MORPHOSYS : Announces Clinical Milestone in Ophthalmology Program
Most Read News
33m ago Pilots extend Lufthansa strikes to long-haul flights
46m ago Adidas shares jump on report of bid for Reebok unit
1d agoDJENERGY DEVELOPMENT : Secures $315 Million Financing For Wind Project
1d ago MICROSOFT PLANS TO LAUNCH SMARTWATCH WITHIN WEEKS : Forbes
1d ago BUSINESS MACHINES : IBM to pay Globalfoundries $1.5 billion to take chip unit off its hands - WSJ
Most recommended articles
3m ago YAHOO SET TO OUTLINE COST-CUTTING EFFORTS : Wsj
5m agoEUROZONE : Current Account worse than estimates at 18.9M
6m ago Shire CFO to leave drugmaker as AbbVie drops bid
7m agoDJLONDON MARKETS : FTSE 100 Slips, Extending Loss Into Fifth Week
20m agoDJOil Futures Holding Up
Dynamic quotes  
ON
| OFF