Nov 14 (Reuters) – The U.S. Federal Reserve’s (Fed) chief regulator Michael Burr said on Monday that the U.S. Federal Reserve (Fed) is trying to bolster its financial system amid a weakening economy. He said he was monitoring the stress on cryptocurrencies, suggesting that tighter scrutiny of cryptocurrencies was on the horizon.
In a written testimony prepared to be submitted to the Senate Banking Committee on Tuesday, Barr said, “As the institutions under our supervision manage changing financial conditions, the Fed will take steps to address liquidity, credit, and interest rate risks. It will be of interest,” he said. He weakened “amid tight financial conditions and heightened uncertainty”.
“A weakening economy can put stress on households and businesses, and by extension, the banking system as a whole,” he said, noting that inflation is too high, and that geopolitical events like Russia’s war with Ukraine could put pressure on the economy. The global economy poses downside risks to the US.
Barr’s comments suggest the Fed is tightening monetary policy more aggressively than it has in 40 years, at a time when it is battling too-high inflation by trying to slow the economy and take heat out of the labor market. sometimes issued.
Last week, Fed policymakers unanimously decided to raise the benchmark rate by 75 basis points to a range of 3.75% to 4%.
Barr used his speech to demonstrate a set of regulatory priorities, including bank capital requirements, bank mergers and cryptocurrencies.
“We don’t want to stifle innovation, but weak or outdated regulation puts us at risk, puts consumers, businesses and the economy at risk, and puts new products and services at risk for consumers and investments. It’s home,” Barr said.
Recent developments in the cryptocurrency market are “a threat to investors and consumers associated with new and novel asset classes and activities, largely occurring outside the banking sector, but without strong guardrails. It highlights the risks,” he added.
Cryptocurrency exchange FTX collapsed last week, shocking the entire industry and sparking calls for tougher regulatory oversight.
Reported by Ann Saphir and Lindsay Dunsmuir.Edited by Leslie Adler and Cynthia Osterman
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