The Federal Reserve’s vice chairman for supervision Michael Barr said in his first policy speech Wednesday that he would work to make the financial system more fair and safe on several fronts.
In a far-reaching speech that touched on mergers, digital payments, cryptocurrencies, and Basel III capital requirements, Barr said he’s focused on building on the work regulators have done since his job was created in the wake of the global financial crisis.
“Success in financial regulation and supervision does not mean standing still because finance does not stand still,” Barr said in his remarks at Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution.
He called on Congress to pass a “much needed” law to bring stable coins inside the prudential regulatory perimeter, as the central bank continues to study a potential digital-based currency for the U.S. Federal Reserve. Generally, prudential regulation may include minimum capital or liquidity requirements as well as supervisory inspection of an asset class.
In another effort, the Fed will also seek public comment on implementing regulatory capital requirements that align with the final set of Basel III standards. Barr said he’ll have more to say about that effort this fall.
The Fed is looking at regulatory oversight beyond globally systemically important banks, or G-SIBs to some of the other largest banks in the U.S. as they grow and as their significance in the financial system increases, he said.
“As we consider future policy actions in this area, the Fed will work with our colleagues at other banking regulatory agencies and seek public comment,” he said.
Barr said he’s working with the Federal Reserve to assess how it’s performing merger analysis and where it could improve.
“A merged institution may be able to provide more competitive products and services, but it could also have the potential to reduce competition and
access to financial services in a geographic area by raising prices, narrowing the range of services offered, and reducing the supply of small business or community development loans that rely on local knowledge,” he said.
