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United States: Fed governor considers it necessary to reform the financial system

2021-03-01T19:46:32.030Z


The pandemic has highlighted the need to reform the financial system, so that it is more resistant to shocks, said on Monday a governor of the powerful American Central Bank (Fed), Lael Brainard, deploring "significant financial vulnerabilities " . Read also: US economy: the Fed minimizes the risk of overheating "The crisis of March 2020 highlights the need for reforms to reduce the risk (...) o


The pandemic has highlighted the need to reform the financial system, so that it is more resistant to shocks, said on Monday a governor of the powerful American Central Bank (Fed), Lael Brainard, deploring

"significant financial vulnerabilities "

.

Read also: US economy: the Fed minimizes the risk of overheating

"The crisis of March 2020 highlights the need for reforms to reduce the risk (...) of tensions in short-term funding markets

,

"

Lael Brainard said at the annual Conference of International Bankers, virtual this year .

"A number of common sense reforms are needed to address unresolved structural vulnerabilities in the non-bank financial intermediation and short-term finance markets

," she pleaded.

She recalled the

"rush for liquidity"

, and the stock market debacle of March 2020, when the inexorable progression of Covid-19 across the world suggested significant economic damage.

At that time,

"the strong and timely action of the Federal Reserve and other financial authorities was essential to stabilize the markets and restore proper functioning

," she said.

$ 120 billion in assets purchased per month

The Fed has been injecting liquidity since March in order to support the proper functioning of the financial system.

Since June, it has been buying $ 120 billion in assets per month, including 80 billion treasury bills and 40 billion MBS (financial products backed by real estate loans).

It is necessary, she said,

"to institute reforms so that our system is more resilient and better able to withstand a variety of possible shocks in the future, including those emanating from outside the financial system".

Conversely,

"some parts of the financial system that had undergone significant reform following the global financial crisis (2007-2008) remained resilient,"

she noted.

Lael Brainard, who was appointed to this post during the Obama administration and is now the only Democrat among the seven governors of the Fed, is a staunch advocate of financial sector regulation.

She had already opposed deregulation in the banking sector.

His name had been mentioned among the potential treasury secretaries of Joe Biden, but it was ultimately the former president of the Fed, Janet Yellen, who was chosen.

Source: lefigaro

All business articles on 2021-03-01

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