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Fed’s Fisher Says Regulation Could Limit CB’s Ability to Stem Panic

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A top Federal Reserve policymaker expressed concern that financial reforms could make it harder for the central bank to stem a panic in credit markets, a warning that comes amid growing stress in corners of the banking sector.

Fed Vice Chairman Stanley Fischer on Friday said it was a “major” concern that the 2010 Dodd-Frank law required the Fed to disclose which banks had borrowed under a special facility designed to extend credit to banks otherwise shut out of lending markets.

The Fed previously released only aggregate figures for this program but now publishes a more detailed report with a two-year lag.

Fischer said the reporting requirements marked a “failure to resolve the problem of stigma – that is, the stigma of borrowing from the central bank at a time when the financial markets are on guard,” according to prepared remarks to a closed-door conference.

“Indeed, some of the Dodd-Frank Act reporting requirements may worsen the stigma problem,” Fischer said, adding that the new regulatory framework was still untested by crisis.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza

@alfonso_forex

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