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Bernanke: "If the crisis has a single lesson, it is that the too-big-to-fail problem must be solved"

Saturday, September 4, 2010

Federal Reserve chairman Ben Bernanke stressed the need for banks to hold more cash in reserve and face stricter regulations and told a panel investigating the causes of the economic crisis that the central bank's policies did not spur the collapse.

He cited ongoing negotiations on the amount of reserves banks must keep to cover their operations and recently passed US legislation as the key tools to tackle the risks posed by big banks.

"Monetary policy is a blunt tool; raising the general level of interest rates to manage a single asset price would undoubtedly have had large side effects on other assets and sectors of the economy."



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