Log in
Lost password
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  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

(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

React to this article
Latest news
Date Title
02:20a ADB ASIAN DEVELOPMENT BANK : Graduates Complete ADB, Australia-Supported Financial Training
02:18a COCA COLA : Christmas looks real thing as truck rolls into town
02:18a ETSY : Ten of the best apps for doing your Christmas shopping
02:17a YAHOO : World Cup is internet hit ; BRITAIN TODAY
02:17a GENERAL MILLS : Consider factory closure's impact, supermarkets told
02:15a HSBC : Big banks will have to ; CITY DESK
02:15a HSBC : Big banks will have to
02:15a POUNDLAND : Rather notto grotto
02:15a J SAINSBURY : Some Fuder for thought
Latest news
Hot News 
OPPORTUNITY INVEST MGMT : 27 november 2015 - Announcement AGM on 22 december 2015
ATLANTIS RESOURCES : Tidal generating firm announces long partnership for investment by Gordon Calder
CYTOTOOLS : berichtet über Ergebnisse der europäischen klinischen Studie Phase III: Resultate der Behandlung des diabetischen Fußes mit DermaPro(R) bestätigen nicht die Ergebnisse der vorangegangenen Studien (DGAP News)
STOCK SPIRITS : Further Downgrades Earnings Guidance For 2015
IMAGINATION TECHNOLOGIES : Sir Hossein Yassaie receives 2015 Lifetime Achievement Award in annual Elektra European Electronics Industry Award...
Most Read News
11/27 RESEARCH AND MARKETS : Rotavirus Infections Therapeutic Development - Pipeline Review & Analysis, H2 2015
11/27 RESEARCH AND MARKETS : Acute Renal Failure (ARF) (Acute Kidney Injury) - Pipeline Review & Analysis, H2 2015
11/27 Board meeting of Dawood Capital Management Limited will be held on November 30, 2015
11/27 RESEARCH AND MARKETS : Global Metastatic Adenocarcinoma of The Pancreas Therapeutics Pipeline Review, H2 2015
11/27 RESEARCH AND MARKETS : Global Ischemic Stroke Therapeutics Pipeline Review, H2 2015
Most recommended articles
12:26a CHINA CHENGTONG DEVELOPMENT : South Africa firms sign $930 million in deals ahead of Xi trip: Xinhua
11/27 WEEKLY TRADING FORECAST : Expect FX Volatility with NFPs, ECB and Much More Ahead
11/27 US Rate Speculation Versus a Tumultuous World of Fundamentals
11/27DJBrazil to File $5.3 Billion Suit Against Samarco, Owners in Dam Collapse -- 2nd Update
11/27 Australian Dollar Faces Perfect Storm of Key Event Risk Ahead