LONDON, Jan. 13 (Xinhua) -- U.S. Fed Chairman
Bernanke said in a speech given here on Tuesday that fiscal actions are unlikely
to promote a lasting recovery unless they are accompanied by strong measures to
further stabilize and strengthen the financial system.
He said that the Fed will do its part to promote economic recovery, but other policy measures will be needed as well. The incoming Administration and the Congress are currently discussing a substantial fiscal package that, if enacted, could provide a significant boost to economic activity.
U.S. Federal Reserve Bank Chairman Ben
Bernanke delivers a speech at the London School of Economics in central
London January 13, 2009.(Xinhua/Reuters Photo) Photo
Gallery>>>
"With the worsening of the economy's growth prospects, continued credit losses and asset markdowns may maintain for a time the pressure on the capital and balance sheet capacities of financial institutions," he said, "Consequently, more capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets."
History demonstrates conclusively that a modern
economy cannot grow if its financial system is not operating effectively, he
added.
"Should the Treasury decide to supplement injections
of capital by removing troubled assets from institutions' balance sheets, as was
initially proposed for the U.S. financial rescue plan, several approaches might
be considered", he said.
U.S. Federal Reserve Bank Chairman Ben
Bernanke listens to questions after delivering his speech at the London
School of Economics in central London January 13, 2009. (Xinhua/Reuters
Photo) Photo
Gallery>>>
Public
purchases of troubled assets are one possibility. Another is to provide asset
guarantees, under which the government would agree to absorb, presumably in
exchange for warrants or some other form of compensation, part of the
prospective losses on specified portfolios of troubled assets held by banks.
Yet another approach would be to set up and
capitalize so-called bad banks, which would purchase assets from financial
institutions in exchange for cash and equity in the bad bank.
In addition, efforts to reduce preventable
foreclosures, among other benefits, could strengthen the housing market and
reduce mortgage losses, thereby increasing financial stability.
Bernanke emphasized the importance of financial
supervision on the process of striving to stabilize financial markets and
institutions.
"We need stronger supervisory and regulatory systems
under which gaps and unnecessary duplication in coverage are eliminated, lines
of supervisory authority and responsibility are clarified, and oversight powers
are adequate to curb excessive leverage and risk-taking," he said.
According to Bernanke, regulatory oversight should be
coordinated internationally to the greatest extent possible and the work of
strengthening the financial infrastructure should be continued. In addition, the
supervisory authorities should develop the capacity for increased surveillance
of the financial system as a whole, rather than focusing excessively on the
condition of individual firms in isolation.
"We must take care not to take actions that forfeit
the economic benefits of financial innovation and market discipline," he
emphasized.
LONDON, Jan. 13 (Xinhua) -- U.S. Fed Chairman Bernanke
said in a speech given here on Tuesday that the Fed Reserve still has powerful
tools at its disposal to fight the financial crisis and the economic downturn,
even though the overnight federal funds rate cannot be reduced meaningfully
further.
He said that the first set of tools, which are closely
tied to the central bank's traditional role as the lender of last resort,
involve the provision of short-term liquidity to sound financial institutions.
Full story
WASHINGTON, Jan. 13
(Xinhua) -- The U.S. federal budget deficit totaled 485.2 billion dollars in the
first three months of the current fiscal year, the highest on record for a first
quarter, the Treasury Department reported on Tuesday.
While the imbalance from October through December 2008 was
larger than the record for a full fiscal year of 454.8 billion dollars set last
year, the deficit is on track to surpass one trillion for all of fiscal 2009,
which began on Oct. 1, 2008.
WASHINGTON, Jan. 13 (Xinhua) -- The U.S. trade deficit shrank 28.7 percent in
November to 40.4 billion U.S. dollars, the lowest monthly level in five years,
the Commerce Department reported on Tuesday.
The 28.7 percent drop marked the biggest contraction in 12
years and was bigger than expected.
