Copyright 2009 World Media Ltd.All rights reserved
Business World (Digest)

Wednesday 15 April 2009

LENGTH: 409 words


TITLE: Top Fed man wants "regulatory system" New Rules?

HIGHLIGHT:

The current financial crisis underscores the need for a systemic risk regulator, a top official of the U.S. Federal Reserve said.



The current financial crisis underscores the need for a systemic risk regulator, a top official of the U.S. Federal Reserve said.

However, he added that such legislation would face "enormous challenges" and would need sufficient authority to change the behavior of financial institutions.

Most of the world knows "what has already been a long and severe recession", making the regulatory reform more pressing matters, Eric Rosengren, president of the Federal Reserve Bank of Boston, said in prepared remarks for delivery at the Seoul International Financial Forum.

"The need for such extensive government intervention in a primarily in the world underlines the importance of a more stable financial infrastructure - and I believe that for organizations have explicit responsibility for financial stability," he said . Had a systemic risk regulator was able to monitor the solvency risk, liquidity risk and risk management, and react to such practices as dangerous and evil ", some of the most serious financial problems have been identified and their less serious, "Rosengren, who is not a voter on the Fed's policy setting committee this year, said. A need for regulation to monitor any rapid appreciation of an asset class, or institutions financial markets, "said Rosengren. Flags Warning including differing financial trends of past experience and would need to start questioning whether new trends seem likely to keep in time, he says . However, a regulatory system faces a number of challenges, not least how he would have the power to intervene if problems are identified, Rosengren said. "Although the ability to identify emerging issues is crucial, it is not enough, "said Rosengren, who, before becoming the president of the Boston Fed led by the banking supervision and regulation department. "The regulatory system must have the necessary authority to stop unsafe practices." Systemic risk regulation also requires a deep understanding of how the financial industry and products really work, he says, something that was not the case on the eve of the current crisis. The market for credit default swaps, swollen, for example, but seems even less well understood than is desirable, "said Rosengren. A systemic risk regulator must also work in a global environment and to be aware of potential problems with other countries' financial systems, he said. (c) Reuters


LOAD-DATE: 15 April 2009 

Copyright © 2009 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved.
Terms and Conditions Privacy Policy