Fed’s Tarullo casts doubt on counter-cyclical tools
Some tools may not be as effective as regulators hope
Regulators should not expect too much from macro-prudential tools that seek to lean against the financial cycle, Federal Reserve governor Daniel Tarullo said on Friday.
Tarullo flagged several issues with such measures, including difficulties in measuring systemic risk, selecting the appropriate officials to be making macro-prudential decisions, determining the speed of implementation and correct calibration.
Even ignoring these problems, Tarullo said the tools were likely to only work against
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