Regulation and adequate capital requirements would be more appropriate than monetary policy in curbing excesses within the financial sector, Fed Chairman Yellen told the
"I do not presently see a need for monetary policy to deviate from a primary focus on attaining price stability and maximum employment, in order to address financial stability concerns," Yellen remarked.
"That said, I do see pockets of increased risk-taking across the financial system, and an acceleration or broadening of these concerns could necessitate a more robust macroprudential approach."
She noted that action by the Fed would not have prevented the financial meltdown of 2008.
"A tighter monetary policy would not have increased the transparency of exotic financial instruments or ameliorated deficiencies in risk measurement and risk management within the private sector," Yellen said.
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