Federal Reserve Chairman Jerome Powell emphasizes the Fed's readiness to listen and improve the capital framework for large banks.
Mr. Powell reaffirmed the goal of creating conditions for large banks to compete freely, both with non-banking institutions and foreign banks, without mentioning economic or monetary policy prospects.
- Fed accepts new ideas to improve the capital framework for large banks.
- Ensuring free competition between large banks, non-banking institutions, and international banks.
- Fed Chairman did not address economic or monetary policy prospects in his statement.
How is the Federal Reserve prepared to improve the capital framework for large banks?
Mr. Jerome Powell confirmed that the Fed is a flexible organization actively listening to opinions to enhance the capital framework, aiming to ensure financial safety and stability for large banks. This is a strategy to strengthen the national financial system, based on management experience over the years.
We are committed to creating a capital framework that is not only rigorous but also flexible enough for large banks to develop sustainably in an increasingly diverse competitive environment.
Jerome Powell, Federal Reserve Chairman, July 2024
This adjustment helps banks balance risks and capital mobilization, while supporting overall economic development. The Fed's annual reports also highlight the positive impact of improvements in the capital framework.
Why does the Fed emphasize free competition between large banks and other institutions?
Mr. Powell's perspective reflects a deep understanding of the modern financial market, where non-banking institutions and international banks are increasingly playing significant roles. A fair competition framework will promote innovation and broad efficiency.
When large banks and other institutions are provided with equal conditions, the market will become more competitive, thereby bringing real benefits to consumers and the entire economy.
Jerome Powell, speech at the Global Financial Conference, 2024
This also helps minimize systemic risks when all institutions must comply with appropriate regulations, in the context of increasingly deep globalization and growing cross-border capital flows.
Did the Fed Chairman mention monetary policy prospects in his speech?
Jerome Powell did not present economic prospects or monetary policy directions in this speech. Instead, he focused on technical aspects of bank management aimed at creating long-term stability.
This is common in specialized speeches about financial structure, when the Fed carefully considers multidimensional impacts before adjusting macroeconomic monetary policy.
What benefits will large banks receive from the Fed improving the capital framework?
When the capital framework is optimized, large banks will enhance their competitive ability, minimize bankruptcy risks and credit difficulties. This helps maintain healthy liquidation and increase investor confidence.
Financial analysts note this is an important step to consolidate banking system stability in an economically volatile context.
Are there significant differences in the capital framework between domestic and international banks?
The Fed is working to adjust and create an equal playing field between domestic banks and banks in other regions, ensuring appropriate laws and capital standards, minimizing risks from uneven capital tightening or loosening.
This synchronization also supports more efficient cross-border liquidation and trade, helping Vietnamese and global banks adapt to the development speed of cryptocurrency and global financial markets.
Frequently Asked Questions
What does Fed Chairman Jerome Powell want to convey through this statement?
Mr. Powell emphasizes the Fed's openness to listening and improving the capital framework to ensure large banks compete healthily.
Did the Fed address monetary policy in the speech?
No, the statement focused on bank capital structure without discussing monetary or macroeconomic policy.
How does improving the capital framework help large banks?
It enhances competitive ability, reduces financial risks, and consolidates banking system stability.
Does the Fed support competition between banks and non-banking institutions?
Yes, the Fed creates conditions for fair competition between banks and non-banking institutions as well as foreign banks.
What is the importance of creating an equal playing field between domestic and international banks?
It helps reduce financial risks, improve operational efficiency, and promote international liquidation.
