(September 27 – 17:45 ET) –U.S.
Federal Reserve Board governor
Laurence Meyer criticized the
emergence of “super-regulators”
in the banking industry today
during an address to the Institute
of International Bankers in
Washington.
His comments were aimed at the
United Kingdom, Australia and
Switzerland, which have built
financial services super-regulators
to eliminate or curtail regulatory
responsibilities of their central
banks. While some see this as a
“the wave of the future, Meyer
said he’s not convinced. “I think
their legislatures have made a
mistake.”
While he agreed that one
regulator makes sense as the roles
of banks and non-banks converge,
Meyer said central banks remain
responsible for prudential
regulation and surrendering
their involvement in the market
may mean they won’t be able to
handle a financial crisis.
“I think the separation of
central banking and supervision
and regulation is dangerous,”
he says.
Meyer favours the use of market
discipline as much as possible,
saying that imposing “bank-like
regulation on non-bank activities
is exactly the wrong direction.”
He said the Fed will be paying
more attention to market measures
of risk, and looking for ways to
improve bank disclosure,
particularly when it comes to
risk. He suggested founding an
industry-led task force to
identify best-practices for
bank disclosure, and then
encouraging such practices.
IE Staff