INSUBCONTINENT EXCLUSIVE:
Washington: Tensions over trade, the turbulent Brexit discussions, and trouble in China and emerging markets could rock a US financial
report devoted to financial stability.
The report noted several signs of resilience in the financial system to the sorts of unexpected
shocks that might arise, including the strong capital position of banks, generally tempered borrowing by households, and a system less
vulnerable to the sorts of runs or credit crunches that nearly shut down the global economy in the 2007 to 2009 financial crisis.
But the
escalating trade war between the United States and major trading partners, a messy breakup between Britain and the European Union, or a
twice yearly review of risks to financial stability, defined as the degree to which the financial system can continue to lend to businesses
and households even when subjected to an outside shock.
The Fed has included its views on financial stability in other documents and
marquee publication of its own shows the importance the issue has taken on as Fed officials strive to avoid the mistakes that led to the
stability was to the economy overall
The report aims to put on public display twice a year what the central bank is watching and how those parts of the market are behaving .
It
That effort was begun and expanded upon by former Fed chairs, but Powell has said he wants to carry it further to keep public faith in the
policy .
In separate reports on Wednesday president Donald Trump renewed his criticism of Powell, and Treasury Secretary Steve Mnuchin was
reported to have inquired among bond investors what they thought of Fed policy.
Federal Reserve officials said they specifically did not
draw a staff conclusion about the overall state of financial stability, leaving that up to policymakers
But they compared the situation today, when leverage is low among households and banks, to the pre-crisis situation where much of the United
additional capital requirements on large banks
The use of an additional capital requirement during good economic times, by scaling back lending, is one way supporters of the idea feel the
worst financial bubbles might be avoided.
