Tue, 29 April
11.1 C
Yerevan
USD: 389.46 RUB: 4.73 EUR: 441.92 GEL: 141.70 GBP: 519.38
spot_img

Bernanke says stress tests make banks more stable – Reuters

YEREVAN, April 9. /ARKA/. Federal Reserve Chairman Ben Bernanke said on Monday the central bank’s periodic bank stress tests have made the financial system more resilient.

Contrasting the current state of banks to their tattered condition in 2009 after the historic financial crisis, Bernanke said the sector’s rebound was positive for the broader recovery given the importance of credit to economic growth.

“The resilience of the U.S. banking system has greatly improved since then, and the more intensive use and greater sophistication of supervisory stress testing, as well as supervisors’ increased emphasis on the effectiveness of banks’ own capital planning processes, deserve some credit for that improvement,” Bernanke said in prepared remarks to a conference on financial stability sponsored by the Atlanta Federal Reserve Bank.

In a speech that did not directly touch on the outlook for the U.S. economy and monetary policy, Bernanke hinted at why the central bank continues to pursue an extraordinarily easy monetary policy.
“The economy is significantly stronger than it was four years ago, although conditions are clearly still far from where we would all like them to be,” he said.

Some critics have argued the Fed’s stress tests are not sufficiently harsh, while banks have complained they do not fully understand the central bank’s methodology.

The Fed has released scores for major bank holding companies that show how low their capital ratios would fall under proposed plans for dividends and stock buybacks if “severely adverse” economic conditions unfolded over the next two years.

Bernanke said providing too many details about the methodology could lead banks to curtail their own internal risk-management systems.

He argued U.S. financial institutions had bolstered their balance sheets by raising more capital. However, he said too many firms still rely too heavily on short-term sources of funding, raising some potential for trouble.

“In the area of liquidity and funding, continued improvement is still needed on some dimensions,” he said. “Notably, supervisors will continue to press banks to reduce further their dependence on wholesale funding, which proved highly unreliable during the crisis.”

Bernanke said it was important the stress test scenarios remain severe even as the economy improves so as to not generate complacency.

The Fed was widely criticized in the wake of the global financial crisis for missing the oncoming train wreck and being too lenient on banks that took excessive risks.
The crisis led to a series of unpopular bailouts of financial institutions that tarnished the central bank’s reputation. –0–

spot_img

POPULAR

Euro exchange rate down 1 point, while US dollar and ruble up

The average market exchange rate of the U.S. dollar to the Armenian dram on April 25, 2025, rose by 0.77 points compared to April 23 and amounted to AMD 390.33.

Armenia may access $25 mln from the IMF under the SBA agreement in June

An International Monetary Fund (IMF) team led by Iva Petrova visited Yerevan from March 31 to April 10, 2025, to conduct discussions for the fifth review under the Stand-By Arrangement (SBA) with Armenia.

Instruments for supporting SMEs in Armenia were discussed with bankers at the Ministry of Economy

Financial instruments for supporting small and medium-sized businesses (SMEs) were discussed by Deputy Minister of Economy of Armenia Lilia Sirakanyan and bank representatives.

Armenia ratifies EUR 10.1 million investment agreement with EIB on Yerevan’s Second Energy Efficiency Program

The Armenian Parliamentary Committee on Financial, Credit and Budgetary Affairs gave a positive conclusion at its meeting on Friday on the ratification of the agreement on the investment grant for the "Second Yerevan Energy Efficiency Program" in the amount of EUR 10.1 million.

In February, deposits in Armenian banks grew by 1%, loans decreased by 0.1% due to dram funds

In February 2025, deposits in Armenian commercial banks grew by 1% (MoM), while loans decreased by 0.1% (MoM), in both cases the changes were due to funds denominated in drams.

LATEST NEWS

spot_imgspot_imgspot_img