FRANKFURT (MNI) – A solid and independent central bank is needed
for a strong economy, U.S. Federal Reserve Chairman Ben Bernanke told
the International Herald Tribune in an interview published Monday.
Bernanke noted that the 1,000-point collapse in the Dow Jones
Industrial Average on the afternoon of May 6 reflected the complexity of
financial-market systems.
He also pushed for a fundamentally resilient financial system.
Although some in the US Congress would like to limit the Fed’s
independence, “responsible people in Congress have recognized that you
can’t have a strong economy without a solid, independent central bank
that has appropriate regulatory roles,” the Fed chairman said.
“I continue to count on good sense and wisdom to trump short-term
political advantage,” he added.
The Dow’s 1,000-point tumble on May 6 “was just a small indicator
of how complex and chaotic, in the formal sense, these systems are,” he
said. “Our financial system is so complicated and so interactive — so
many different markets in different countries and so many sets of
rules,” he elaborated.
“What happened in the stock market is just a little example of how
things can cascade or how technology can interact with market panic,” he
said.
The Fed’s supervisory role must be reframed around financial
stability, the chairman urged.
“I just think it’s not realistic to think that human beings can
fully anticipate all possible interactions and complex developments,” he
said.
“The best approach for dealing with this uncertainty is to make
sure that the system is fundamentally resilient and that we have as many
fail-safes and backup arrangements as possible.”
–Frankfurt bureau; +49-69-720142; tbuell@marketnews.com
[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MK$$$$,M$$CR$]
