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
Recommend:
0
   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

Recommend :
0
React to this article
Latest news
Date Title
<1m ago GFO GRAIN FARMERS OF ONTARIO : Planting Season Fast Approaching for Grain Farmers
<1m ago CARDINAL HEALTH : Expands Lab Portfolio to include Hematology Capital Equipment
<1m ago LIVE NATION ENTERTAINMENT : Wiz Khalifa and Young Jeezy Top the Bill on Third Annual Under the Influence of Music 2014 Summer Tour
<1m ago Fitch Affirms Miami-Dade Expressway Auth, FL's Revs at 'A-'
1m agoDJORACLE : Panel Advises Oregon to Fold Its Health Exchange
1m ago INTERMOUNTAIN COMMUNITY BANCORP : Financial Statements and Exhibits (form 8-K)
1m agoDJTreasury Bonds Little Changed After Volatile Session
2m ago WILLIAMS PARTNERS : Mount Joy Township Residents, Officials Vent Frustration Over Pipeline Proposal
2m ago NEW YORK TIMES : 1Q profit falls 51 pct
2m ago ARMSTRONG WORLD : Ceo's Compensation Rises 4.5%
Latest news
Advertisement
Hot News 
SERVICEPOWER TECHNOLOGIES : Forms Strategic Relationship with Bosch
GREETINGS : Says Full-Year In Line With Expectations
Eagle Rock Announces Suspension of Distribution, Intent to Resume Following Close of Midstream Contribution Transaction
Elizabeth Arden Hires Goldman Sachs to Assist in Possible Sale -Reuters
CLEARFIELD : Reports Fiscal 2014 2nd Quarter Results
Most Read News
11h ago Juicy Apple buoys shares, euro volatility sinks
1d ago BUFFETT : moving oil by rail safely major industry concern
13h ago BLUNT BAYERN GIVEN A REAL MASTERCLASS ; CHAMPIONS LEAGUE Semi-final first leg
8h ago Van Gaal's ego may be too big even for United
1d ago ACTIVISION BLIZZARD : Newest Skylanders® Game - Skylanders Trap TeamTM - Takes Toys-to-Life Phenomenon to New Levels by Bringing Digital Characters into the Physical World
Most recommended articles
11h ago Juicy Apple buoys shares, euro volatility sinks
3h ago Healthcare deal hopes push FTSE to seven-week closing high
2d ago Barclays joins retreat from commodities as new rules bite
04/17 BLACKSTONE : earnings rise 30 percent, boosted by private equity gains
1m agoDJORACLE : Panel Advises Oregon to Fold Its Health Exchange
Dynamic quotes  
ON
| OFF