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Yellen Says Risk Panel to Address Vulnerabilities From 2020 Market Meltdown

WASHINGTON—Treasury Secretary Janet Yellen convened a council of regulators tasked with monitoring the stability of the financial system, homing in on risks that emerged during the market turmoil of a year ago when the coronavirus pandemic hit the U.S. economy.

Ms. Yellen led her first meeting Wednesday as the head of the Financial Stability Oversight Council, focusing on a variety of issues, including money-market mutual funds’ and hedge funds’ activities and their roles in the market turbulence last year, the Treasury Department said last week.

“We are digging out of a deep hole now, but we should be mindful that the hole could easily have been even deeper,” Ms. Yellen said in prepared remarks. “The fact that extreme policy interventions were still required to support market functioning should serve as a clear reminder: We have to do more to address vulnerabilities in the financial system.”

The meeting’s agenda included a public discussion on climate change, an issue Ms. Yellen said poses an “existential threat to the environment and a tremendous risk to our country’s financial stability.” The council also deliberated behind closed-doors on money funds and hedge-fund activities, to allow for private discussion of sensitive market information. Details of the discussion weren’t released.

In March 2020, investors’ fears about the pandemic’s potential global impact sparked a dash for cash and liquidation of even supersafe assets such as Treasury securities. Volatility jumped in short-term funding markets, with investors bolting from certain money-market mutual funds faster than they did during the 2008 crisis.

Yellen Says Risk Panel to Address Vulnerabilities From 2020 Market Meltdown Source link Yellen Says Risk Panel to Address Vulnerabilities From 2020 Market Meltdown

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