Fed Study Attempts to Address Scope of U.S. Macroprudential Risk
Building on prior FRB research on the increasingly porous regulatory perimeter, a new FRB staff study crafts quantitative measures of the U.S. financial system to assess growing macroprudential risk. In contrast to the relatively-sanguine view of asset prices in the Fed’s most recent stability report (see Client Report SYSTEMIC92), the study finds that cyclical credit flows into unregulated institutions are a leading indicator of systemic risk.
FRB-NY: Stablecoins Won’t Last
The Federal Reserve Bank of New York yesterday posted a paper concluding that stablecoins are not likely to prove a lasting part of the U.S. financial system. We will shortly provide clients with an in-depth analysis of today’s HFSC hearing; the staff memo preceding it clearly takes a different stand, as did the PWG’s report (see Client Report CRYPTO21).
Democrats Detail Beneficial-Ownership Regulatory Standards
Sen. Brown (D-OH) and Reps. Waters (D-CA) and Maloney (D-NY) late yesterday released their comment letter to Secretary Yellen on FinCEN’s initial beneficial-ownership standards. The letter generally praises the proposal, including its broad beneficial-owner definition and those for “substantial control,” “ownership interest,” and “reporting company.”
Basel Chief Pleads for Tough III/IV Standards
The Basel Committee’s new chair, Pablo Hernández de Cos, today told the European Parliament that jurisdictions must quickly finalize the Basel III/IV package of capital reforms. As noted yesterday, Acting FDIC Chairman Gruenberg included these in his near-term priorities, departing from prior FDIC and Fed statements by making it clear that the U.S. standards should strengthen current rules even if this means additional big-bank capital burden.