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 | 08:00pm US/Eastern
Recommend:
0

(Adds comments from question-and-answer session in last two paragraphs.)

 
   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

--Christian Berthelsen contributed to this article.

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

Recommend :
0
React to this article
Latest news
Date Title
2m ago NORTHWEST INTNL HEALTHCARE PRPRTS REIT : International Healthcare Properties REIT announces April 2014 distribution
3m ago WORLD ACCEPTANCE SHAREHOLDER ALERT BY FORMER LOUISIANA ATTORNEY GENERAL : Kahn Swick & Foti, LLC Reminds Investors With Losses in Excess of $100,000 of Lead Plaintiff Deadline in Class Action Lawsuit Against World Acceptance Corp. - WRLD
3m ago ACTIVISION BLIZZARD : Photos from Skylanders Trap Team Reveal Event in New York Are Available on Business Wire's Website and AP PhotoExpress
4m ago EASYJET : allows 'flight mode' during take-off, landing
4m ago BANK OF CYPRUS PUBLIC : concludes Ukraine, Banca Transilvania sale
4m ago NORTHWEST INTNL HEALTHCARE PRPRTS REIT : International Healthcare Properties REIT Releases Fourth Quarter 2013 Results
6m ago FORD MOTOR : F150 Supercrew Used Gearboxes Now for Sale Through Auto Portal Online
7m ago THE CONFERENCE BOARD : Leading Economic Index® for China Increased in March
7m ago LOGITECH : Q4 FY 2014 Sales, Profit and Cash from Operations Exceed Expectations
8m ago US Dollar Technical Analysis – Recovery Aiming to Continue
Latest news
Advertisement
Hot News 
MATRA PETROLEUM : EGM Statement – Cancellation of trading on AIM
RTC : Board Appointment
ZOTEFOAMS : Unilever to use Zotefoams's MuCell® Extrusion technology for its Dove Body Wash Bottles in Europe
IRONVELD : Shares Jump 26% As Study Confirms Viability Of Iron Project
WEDNESDAY SECTOR LEADERS : Rental, Leasing, & Royalty, Precious Metals
Most Read News
1h ago Apple shares jump 8 percent, Asian stocks lag
1h ago BUFFETT : moving oil by rail safely major industry concern
3h ago GE in talks to buy France's Alstom - Bloomberg
1h 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
58m ago WAL MART STORES : -Mart says former CEO Scott to retire from board
Most recommended articles
1h ago Apple shares jump 8 percent, Asian stocks lag
9h ago Weaker FTSE 100 gets support from ABF and AstraZeneca
1d ago Barclays joins retreat from commodities as new rules bite
6d ago BLACKSTONE : earnings rise 30 percent, boosted by private equity gains
8m ago US Dollar Technical Analysis – Recovery Aiming to Continue
Dynamic quotes  
ON
| OFF