Fed's Powell: central banks must strive to enhance transparency on supervision

By Lindsay Dunsmuir

(Reuters) - Central banks around the world should strive to find news ways to be transparent and accountable in their regulation of financial institutions to maintain the integrity of the system, Fed Chairman Jerome Powell said on Friday.

Powell, speaking to a global central banking conference in Stockholm, Sweden, did not mention the U.S. economic outlook or the path of interest rates.

"The case for enhanced transparency is not just about being accountable; it is about providing credible information that can help restore and sustain public confidence in the financial system," Powell said in remarks prepared for the conference.

He noted that the degree of independence granted to central banks in many countries, including the United States, had improved the financial stability of the banking system since the 2007-2009 financial crisis and recession, but cautioned that it may also have contributed to an erosion of public trust.

The Federal Reserve has taken many actions since the crisis, including higher capital and liquidity buffers, stress tests and resolution planning for banks.

"Transparency and incorporation of public feedback in these areas have produced more effective supervision and regulation," Powell said.

However, Powell cautioned that central banks could not stand still in their approaches if they are to maintain their financial stability efforts. He cited future innovations in the delivery of financial services as having the potential to raise new vulnerabilities.

"We will need to keep up with the pace of innovation, which will doubtless require changes to our approach to financial stability," he said.

(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)

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