REUTERS: The United States and Japan may need to shore up bank oversight to prepare for economic downturns, the head of the Federal Reserve Bank of Boston warned on Friday.
Rosengren, who is voting member of the Fed this year on U.S. interest rates, did not discuss his monetary policy outlook in the speech. The Fed on Wednesday signaled that rate cuts could begin as early as July in response to growing economic risks, rising U.S. trade tensions and tepid inflation. The Fed has cited high levels of U.S. corporate debt among major risks to the economy today.
"Despite the passage of time and adoption of better policies, one could argue that the Japanese banking system is now, once again, being threatened by adverse economic conditions," said Rosengren, who was at the Boston Fed when the 2008 global financial crisis shook the economy."A shrinking population, aging demographics, and very low interest rates provide very little room for Japanese banks to operate profitably.
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