FRB Vice-President Randal Quarles highlights strength of banking system in economic recovery – Finance and Banking
United States: FRB Vice President Randal Quarles highlights strength of banking system in economic recovery
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In his testimony before the Senate Banking Committee, Federal Reserve Commission (“FRB”) vice chairman for oversight, Randal K. Quarles provided lawmakers with an update on the effects and phase-down of programs implemented in response to the pandemic.
Mr Quarles said the FRB (i) has closed almost all of its emergency lending facilities, (ii) allowed temporary leverage rule changes to expire, and (iii) plans to bring major banks back to zero. its regular capital regulation program. Mr Quarles credited the post-2008 stress testing program with adequately preparing banking institutions for the economic impact of the COVID-19 pandemic, especially since it was the ‘first test in the world real ‘regulatory regimes created after the 2008 financial crisis. Mr Quarles highlighted the strength of the US banking system today, citing higher levels of liquidity and capital than in 2020, with more than $ 100 billion in additional loan loss reserves that allow the system to to be “well positioned to face future shocks.” . “
Mr. Quarles described the importance of analyzing the events of the past year and recommended further consideration of the following areas:
- tensions in short-term funding markets;
- blue chip money market mutual funds;
- Treasury markets;
- the design and measurement of the additional leverage ratio;
- changes in customer practices and patterns of use of financial services; and
- changes in the relationship between banks and non-bank financial institutions.
Mr. Quarles also noted that the two biggest priorities of the FRB for 2021 are:
- finalize the Basel III reforms for international banking organizations; and
- the implementation of the “long overdue” transition from LIBOR.
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