`Important Blind Spots' Remain in Shadow Banking, Fischer Says

  • Fed vice chairman comments at financial stability conference
  • He says regulators must remain wary of data gaps in system

Federal Reserve Vice Chairman Stanley Fischer said regulators should remain wary of risks remaining in the financial system because of a lack of data.

“When it comes to financial stability, what you do not know really can hurt you -- and there remains a good bit we do not know,” Fischer said in remarks prepared for a conference in Washington on Thursday. The financial system still has “important blind spots” in part because of data gaps, he said.

Vulnerabilities in the financial system are “moderate -- that is, considerably lower than a decade ago,” Fischer said. Activities of nonbanks such as asset managers, and connections between institutions, are opaque, he said, adding that data on securities lending, bilateral repurchase agreements and derivatives trading “remain inadequate and hence could prove destabilizing.”

Fischer reiterated the Fed’s intention to develop regulations to establish minimum margins for securities-financing transactions that would apply to all market participants.

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