A Quote by Janet Yellen
We need to increase the transparency of shadow banking markets so that authorities can monitor for signs of excessive leverage and unstable maturity transformation outside regulated banks.
Related Quotes
The financial system has to be regulated, we have to end with the tax havens, and it's necessary that the central banks in the world should control a little bit the banks' financing because they cannot bypass a certain range of leverage.
The financial crisis was linked to the fact that banks had excessive leverage and too many risky assets. The solution is not to try to dictate to banks what they can do or not do, but to require them to strengthen their capital to absorb potential losses and hold less risky assets.
Maturity transformation is a central part of the economic function of banks and many other types of financial intermediaries.
I do believe that banks are special - they are very leveraged institutions by nature; therefore, it's even more critical to ensure that the governance and the process of running a banking company are well-organised, managed and regulated.
We survived for hundreds of years under the old banking structure. You'd have clearing banks, then merchant banks doing the racy stuff, and then building societies where you'd join a waiting list for a mortgage. But then banks started buying stockbrokers, doing mortgages, and you ended up with these big banking groups doing everything.
Central banks are choosing to increase their gold holdings as a percentage of total reserves. They obviously think there is a reason to do that. It doesn't make sense to back up one currency with a hoard of other paper currencies. There needs to be a real anchor there. I think that central banks are well behind the curve. If you look at the percentage of above-ground gold controlled by central banks, it's historically low. Hence the fact that central banks are trying to increase their holdings. They've got a long way to go to get where they need to be.
Our problems are solvable if they are clearly defined. To do so, we need to monitor our planetary life support systems the way doctors monitor a patient's vital signs and then use that information to protect ecosystem services as though our lives depend on it, because they do.
One nation banking recognises that banks must not be isolated from the rest of the economy. Because banks and small businesses must succeed or fail together, banks must lend to small businesses so we can get the growth and jobs we need for the future. As things stand, that is not happening enough. Lending was down £10.8billion last year.
The Bankers' New Clothes makes a simple, powerful argument: that banks need to raise more capital. It is entirely persuasive that the extent of their leverage makes the financial system fragile, and it clearly and patiently demolishes all the counter-arguments made by the banks and their lobbyists.
The world needs banking but it does not need banks.
In a world of businessmen and financial intermediaries who aggressively seek profit, innovators will always outpace regulators; the authorities cannot prevent changes in the structure of portfolios from occurring. What they can do is keep the asset-equity ratio of banks within bounds by setting equity-absorption ratios for various types of assets. If the authorities constrain banks and are aware of the activities of fringe banks and other financial institutions, they are in a better position to attenuate the disruptive expansionary tendencies of our economy.
People with banking experience haven't all flocked to the biggest banks; community banks and regional banks, along with smaller trading houses and credit unions, have some very talented people.
The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky.
We need to ban outside income for elected officials. Transparency alone is not enough; it doesn't solve the problem of creating outside dependencies.
The actions taken by central banks and other authorities to stabilize a panic in the short run can work against stability in the long run if investors and firms infer from those actions that they will never bear the full consequences of excessive risk-taking.
Separating out banks and investment banks right now under Glass-Steagall would have very big implications to the liquidity and the capital markets and banks being able to perform necessary lending.
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