Bernanke says financial stability a work in progress

STONE MOUNTAIN, Georgia Mon Apr 9, 2012 7:24pm EDT

U.S. Federal Reserve Chairman Ben Bernanke pauses as he gives a lecture on the 2008 global financial crisis in a classroom at George Washington University School of Business in Washington, March 29, 2012. REUTERS/Jonathan Ernst

U.S. Federal Reserve Chairman Ben Bernanke pauses as he gives a lecture on the 2008 global financial crisis in a classroom at George Washington University School of Business in Washington, March 29, 2012.

Credit: Reuters/Jonathan Ernst

STONE MOUNTAIN, Georgia (Reuters) - The U.S. economy has yet to fully recover from the effects of the financial crisis, and regulators must continue to find new ways to strengthen the banking system, Federal Reserve Chairman Ben Bernanke said on Monday.

"The heavy human and economic costs of the crisis underscore the importance of taking all necessary steps to avoid a repeat of the events of the past few years," Bernanke told a group of economists and finance experts at a conference sponsored by the Federal Reserve Bank of Atlanta.

In a speech that did not touch directly on the outlook for economic growth or monetary policy, Bernanke focused on the lingering blind spots for financial authorities trying to prevent a repeat of the 2008-2009 meltdown.

Bernanke said financial stability matters had historically played second fiddle to monetary policy issues in the list of central bank priorities, but the crisis changed that.

"Financial stability policy has taken on greater prominence and is now generally considered to stand on an equal footing with monetary policy as a critical responsibility of central banks," he said.

Bernanke said recent bank stress tests will become a regular feature of the supervisory landscape, and for that reason the latest round of tests is being reviewed to identify possible areas of improvement in "execution and communication."

He reiterated a worry that he and other top policymakers have expressed about the continued vulnerability of money market funds.

"Additional steps to increase the resiliency of money market funds are important for the overall stability of our financial system and warrant serious consideration," Bernanke said.

"The risk of runs ... remains a concern, particularly since some of the tools that policymakers employed to stem the runs during the crisis are no longer available," he said.

(Reporting By Pedro da Costa; Editing by Leslie Adler)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
Harry079 wrote:
“at a conference sponsored by the Federal Reserve Bank of Atlanta”

Wonder if this conference featured clowns and mediums?

Apr 09, 2012 7:35pm EDT  --  Report as abuse
nialet wrote:
We don’t need to strengthen the mafia banking system. What we need to strengthen is manufacturing base and personal responsibility before other fellow men and God.

Apr 09, 2012 8:28pm EDT  --  Report as abuse
economist60 wrote:
Ask yourself, If a person makes decisions based on misleading information are their decisions ultimately likely to prove sound or unsound? The answer is hardly mysterious.

Now…distorting the most important set of prices in our economy, rates of interest, thus misguiding virtually everyone making economic decisions is not likely to lead to stability is it? This really isn’t rocket science folks.

Apr 10, 2012 4:26am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.