© Reuters. FILE PHOTO: U.S. Treasury Undersecretary For Domestic Finance Nellie Liang, testifies before the Senate Banking, Housing and Urban Affairs Hearings to examine the President’s Working Group on Financial Markets report on Stablecoins in Washington, D.C, U.S
WASHINGTON (Reuters) -The U.S. government will continue using its tools to prevent contagion in the banking sector, as warranted, to ensure Americans’ deposits are safe, the Treasury undersecretary for domestic finance, Nellie Liang, will tell the U.S. Congress on Tuesday.
In testimony prepared for the Senate Banking Committee, Liang said decisive action taken by the federal government in recent weeks had worked to restore public confidence, protect depositors and bolster liquidity in the banking system.
“We continue to closely monitor developments across the banking and financial system,” Liang said in the remarks. “As Secretary (Janet) Yellen has said, we have used important tools to act quickly to prevent contagion. And they are tools we would use again if warranted to ensure that Americans’ deposits are safe.”
Investors have dumped banking stocks globally over the past two weeks, with the Federal Reserve’s rapid interest rate hikes to rein in inflation blamed by some as the root cause of the debacle.
Liang said recent developments were “very different” from those during the global financial crisis of 2008-2009, when many institutions came under stress because they held low-quality credit assets.
The financial system was now “significantly stronger” than 15 years ago, Liang said, given post-crisis reforms for stronger capital and liquidity requirements.
She said she supported a Federal Reserve review of the failures of Silicon Valley Bank and Signature Bank (NASDAQ:SBNY), and those reviews would inform any regulatory and supervisory responses.
“We must ensure that our bank regulatory policies and supervision are appropriate for the risks and challenges that banks face today,” she said, underscoring the importance of a diverse and dynamic banking system.
Source: Investing.com
