Fed Gov. Bowman on Financial Stability Risks at TBA Annual Convention

Federal Reserve Governor Michelle W.  Bowman opens the Friday portion of TBA’s 139th Annual Convention.

Bowman starts off noting the key financial stability risks facing the financial system today. She emphasizes the important role the Federal Reserve plays in promoting stability through resiliency to shocks and addressing vulnerabilities. She shares three principles on the role of banking regulators promoting financial stability:

1. Bank supervision can be an effective and efficient tool to promote financial stability. It is important that supervisors focus on core banking risks.
2. Where bank regulation may create or exacerbate financial stability risks, we need to take a hard look at whether those risks are justified by the safety-and-soundness benefits of the regulation.
3. As we evaluate the merits of bank regulation and supervision, we must consider how the Federal Reserve’s regulatory proposals affect markets and institutions beyond the bank regulatory perimeter. This will enable us to better understand the potential unintended consequences.

Bowman says the first and foremost important issue to promote financial stability is fighting inflation. The Federal Reserve is committed to achieving the 2% target goal. Read Gov. Bowman’s full speech here.