Yellen: No Big Differences Between Her, Powell on Bank Rules

Federal Reserve Chairwoman Janet Yellen doesn't expect the Fed will dramatically depart from its current course on bank rules after she leaves early next year.

"All of my colleagues on the board have expressed a strong commitment to keep in place the core reforms that have produced a stronger financial system," Ms. Yellen said Wednesday in what was likely her final press conference as head of the central bank. "I have not seen anything emerge at this point that I would describe as a significant difference."

Current Fed governor Jerome Powell is awaiting Senate confirmation as the next Fed chief. Fed Vice Chair for Supervision Randal Quarles, a Trump appointee, recently joined the Fed as the point person on financial regulation.

Ms. Yellen sees "broad-based commitment" to those "core reforms," such as stress testing and higher banks capital requirements.

"I think all of us agree that it is appropriate to tailor regulatory requirements" and the Fed could do better in alleviating regulatory burden on community banks, she added.

Ms. Yellen also said the U.S. has made "substantial progress" on making big banks' bailouts less likely in the future, but stopped short of echoing Mr. Powell's recent statement that big U.S. banks are no longer "too big to fail."

Ms. Yellen hedged her answer, pointing to progress made in ensuring a huge bank could be unwound in an orderly way while adding: "I think it is an ongoing process."

Asked about the rapid rise in the value of the digital currency bitcoin, Ms. Yellen said it plays a very small role in the payment system, "is not a stable store of value" and "is a highly speculative asset."

She said the Fed doesn't have any role in regulating bitcoin, other than assuring banks are appropriately managing "any interactions they have with participants in that market and appropriately monitoring anti-money-laundering...responsibilities."

"I still see the financial stability risks from [bitcoin] as limited," she said. "Risks threatening financial stability arise when there is exposure to the banking system to fluctuating asset valuations, and I really don't see any significant exposure of our core financial institutions to threats from bitcoin."

"Undoubtedly there are individuals who could lose a lot of money if bitcoin were to fall in price but I really don't see that as creating a full-blown financial stability risk," Ms. Yellen said.

Write to Ryan Tracy at ryan.tracy@wsj.com

(END) Dow Jones Newswires

December 13, 2017 17:23 ET (22:23 GMT)