United States Treasury, along with US financial regulators, has recommended regulations for Federal Reserve to be able to oversee operations of nonbank institutions, as stated by Cointelegraph.
According to Cointelegraph, Janet Yellen, US Treasury secretary, spoke on issues around “nonbank” financial institutions based on financial improbabilities. “The existing guidance — issued in 2019 — created inappropriate hurdles as part of the designation process,” Yellen said. Yellen highlighted that the new guidance practices can eliminate “inappropriate hurdles” around giving nonbank status to financial firms.
Based on information by Cointelegraph, officials have mentioned that the process will permit regulators and institutions to talk about specifications It’s believed that the new guidance will takeover the 2019-era rules through an analysis mechanism, in case a “material financial distress at the company or the company’s activities could pose a threat to US financial stability.”
“Last month’s events show us that our work is not yet done. The authority for emergency interventions is critical. But equally as important is a supervisory and regulatory regime that can help prevent financial disruptions from starting and spreading in the first place,” Yellen said.
(With insights from Cointelegraph)