By Jonathan Spicer
NEW YORK Feb 22 The Federal Reserve's point
person on financial regulation on Friday urged completion over
the next year of an international proposal for capital
surcharges for large, "systemically important" banks.
In a wide-ranging speech on global financial supervision,
including the use of monetary policy as a stabilizing influence,
Fed Governor Daniel Tarullo also suggested that an international
designation of non-bank systemically important organizations be
completed over the next six months.
Tarullo urged international cooperation on strengthening the
oversight of banks and other large financial institutions.
But he also argued that, given the complex assortment of
regulators globally, U.S. regulators should individually deal
with some troubling areas, such as money market mutual funds and
tri-party repurchase markets.
"At some point, it likely will be beneficial to rationalize
somewhat the overlapping, sometimes competing efforts of these
various international arrangements," he told the Cornell
International Law Journal Symposium.
"For the near to medium term, though, it is important to
have some principles for deciding upon the international agenda
that should govern the efforts of these arrangements as a
Turning to monetary policy, Tarullo, who rarely discusses
the topic publicly, said central banks need to assess the effect
their policies have on financial stability and, sometimes,
"adjust their policy decisions to take account of these
Using interest rates to battle financial excesses and price
bubbles has been a hotly debated topic since another Fed
governor, Jerome Stein, raised the idea in a speech earlier this
"To be clear, I do not think that we are at present
confronted with a situation that would warrant these kinds of
monetary policy action," Tarullo said.
But "it seems that now is a good time to discuss these
issues more actively, so that if and when we do face financial
stability concerns associated with asset bubbles backed by
excessive leverage, we will have a well considered view of the
role monetary policy might play in mitigating those concerns,"