Wednesday, September 18, 2019

Jerome Powell September Fed Speech Transcript: Fed Cuts Rates for 2nd Time in 2019 — Ryan Taylor

Victoria Guida: 25:18 Victoria Guida with Politico. Another money-market question. Banks have been pointing to liquidity rules as having contributed to some of the volatility we’ve seen in repo markets and potentially some capital rules as well. Are you all looking at whether some tweaks to the liquidity coverage ratio might help and also, what is the status of the net stable funding ratio rule? Are you all still planning on putting that out soon?
Jerome Powell: 25:47 I think if we concluded that we needed to raise the level of required reserves for banks to meet the LCR, we’d probably raise the level of reserves rather than lower the LCR. It’s not impossible that we would come to a view that the LCR’s calibrated too high, but that’s not something that we think right now. On the other hand, it might be that more reserves are needed in which case we are in a position to supply them.
Jerome Powell: 26:12 In terms of the net stable funding ratio, I believe we put it out for comment and got comments and I believe we’re looking at finalizing that in the relatively near future.
Victoria Guida: 26:28 Just a follow up, in terms of tweaks to the LCR, there’s also been some talk about potentially giving banks some room in times of stress to maybe dip into their liquidity buffers.
Jerome Powell: 26:40 I think we want banks to use their liquidity buffers in times of stress rather than pull back from the markets and pull back from serving their clients as a general rule....
Jerome Powell September Fed Speech Transcript: Fed Cuts Rates for 2nd Time in 2019
Ryan Taylor

1 comment:

Andrew Anderson said...

Of course an honest money system would be simpler conceptually and in practice, e.g. if interest rates are deemed too high then:
1) Increase the Citizen's Dividend
2) Increase negative interest on large and non-individual-citizen accounts at the Central Bank.

If deemed too low, then do the reverse.