Fed’s supervision may have added to repo turmoil, Quarles says
Fed will re-examine effects of supervisory approach, vice-chair tells US lawmakers
The Federal Reserve’s post-crisis regulatory and supervisory approach may have inadvertently worsened mid-September’s repo market rate spike, its vice-chair of supervision, Randal Quarles, said.
Quarles told US lawmakers that the Fed believes its internal liquidity stress-test framework may have created a tendency by banks to hoard reserves, deterring them from depleting their cash levels to meet the September 16 and 17 repo market demands.
“The internal liquidity stress tests that we run can
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