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Fed official cautions against over-regulation for Treasury markets

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According to Market Intelligence, December 2022

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Fed official cautions against over-regulation for Treasury markets

U.S. Federal Reserve Gov. Jerome Powell said more regulation isn't always the answer to issues in the bond markets.

Still, he said, while rules sometimes won't be able to address the flexibility that market participants require, regulators must find ways to ensure that trading is fair to all participants, Powell said in a speech to the Treasury Market Practices Group in New York on Oct. 5.

The group "plays an important role in helping to 'fill in the cracks' between the competing regulations that various Treasury market participants face," he said.

This role is especially important for Treasury markets now, with banks being ordered to hold larger amounts of safer assets to meet capital requirements, he said.

Powell is one of several candidates who reportedly have been interviewed by the White House as a potential replacement for Fed Chairman Janet Yellen.