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
06:52a Bundesbank chief concerned about emergency funding for Greek banks
06:50a RIDLEY : Alltech to buy Ridley Inc.
06:49a CINEDIGM : Vintage and new TV shows now on DVD
06:48a HSBC : hints at relocation outside UK over regulations
06:48a BARCLAYS : Tourism missing 'grey' billions ; But 'Poldark effect' is 10-year 'gift'
06:48a VICTORIA PARK : Tisdale refuses to give up hope of securing coveted play-off position ; Read match report from Exeter City at Harlepool first Only in this...
06:48a COSTCO WHOLESALE : Twin Falls Church Plans to Expand, Holds Fundraiser
06:48a HSBC : shares rise on HQ review plan
06:47a MICHELIN CGDE : Sign up for British food, urges top chef Tom
06:46a SAVILLS : Welcome to our Farms
Latest news
Advertisement
Hot News 
GCP STUDENT LIVING : Dividend Declaration and Net Asset Valuation
AERIE PHARMACEUTICALS : Pharma plunges aftermarket as Rhopressa study fails
SYQIC : Gets Working Capital Facility Offer, Improves Cash Position
INNATE PHARMA : and AstraZeneca announce global agreement for IPH2201 in immuno-oncology
French Connection warns on full-year results
Most Read News
04/24DJSTARBUCKS : Works to Get Cash Registers Back On Line
04/24 SONY : raises FY 2015 profit forecast to $2.5 billion: Nikkei
04/24 DEUTSCHE BANK : to split off Postbank via stock market - trade union
04/24 Comcast drops Time Warner Cable bid after antitrust pressure
04/24 U.S. regulator says 'flash crash' manipulation hard to detect
Most recommended articles
06:52a Bundesbank chief concerned about emergency funding for Greek banks
06:29aDJChina Construction Bank Extends Funds to Ailing State-Owned Baoding Tianwei -- Report
05:58a MARTIN BOUYGUES : Orange boss sees end to French telecom price war
02:42aDJSTARBUCKS : Resolves Cash Register Outage in U.S., Canada
04/24 WEEKLY TRADING FORECAST : FOMC, GDP, Greece and Much More Ahead
Dynamic quotes  
ON
| OFF