Fed's Bernanke: Legacy of financial crisis remains

FXstreet.com (Barcelona) - Fed president Ben Bernanke delivered a speech on Friday at the Conference on Bank Structure and Competition in Chicago, in which he focused mainly on the issue of shadow banking. He did not touch upon monetary policy in his opening remarks.

The Fed head said that the debt crisis is still affecting the US financial system, which “continues to struggle with the economic, legal, and reputational consequences of the events of 2007 to 2009.” He remarked that since then the Fed has significantly increased its means of monitoring the financial system, in order to make better monetary policy decisions.

Nevertheless, despite the recent recovery, a risk of a run on money-market funds remains, the Fed chief warned. Another problem is posed by the companies' reliance on short-term wholesale funding markets.

"While the shadow banking sector is smaller today than before the crisis and some of its least stable components have either disappeared or been reformed, regulators and the private sector need to address remaining vulnerabilities," Ben Bernanke said.