U.S. market watchdogs need to employ an enhanced array of regulatory tools

The U.S. market watchdogs need to employ an enhanced array of regulatory tools to cope with systemic risk and curb severe financial crisis from happening again, Janet L. Yellen, vice chair of the U.S. Federal Reserve, said on Monday.

“Just two years ago, we lived through an almost unimaginable catastrophe — the near collapse of a global financial system,” Yellen said in a speech at the Annual Meeting of the National Association for Business Economics taking place in Denver, Colorado, adding that the financial system is vulnerable to the kinds of catastrophic breakdowns that can wreck the overall economy.

“To avoid a repeat of these events, it is essential that we change the landscape of supervision and regulation,” she contended.

Yellen highlighted the importance of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as it requires regulators to contain risks to the financial system before they erupt into crises and set up a structure to collect data, identify emerging threats to financial stability.

“Our goal should be to deploy an enhanced arsenal of regulatory tools to address systemic risk, making the financial system far more robust. That way, monetary policy can concentrate on its long- standing goals of price stability and maximum employment. Supervision and regulation must serve as the first and main line of defense in addressing systemic risk,” she noted. (PNA/Xinhua)

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