WASHINGTON, March 10 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke said Tuesday even in the midst of the financial crisis, governments should move to strengthen regulations.
"It is not too soon for policymakers to begin thinking about the reforms to the financial architecture," Bernanke said in remarks prepared for the Council on Foreign Relations.
"Until we stabilize the financial system, a sustainable economic recovery will remain out of reach," he said.
Bernanke called for tougher oversight of financial firms deemed "too big to fail," suggesting among other steps, "tighter restrictions on the instruments in which money market mutual funds can invest, potentially requiring shorter maturities and increased liquidity."
Bernanke said, "Developing appropriate resolution procedures for potentially systemic financial firms … is a complex and challenging task." He also suggested, "as a practical matter … addressing systemic risks would seem to require the involvement of the Federal Reserve in some capacity, even if not in the lead role."
Federal regulations should cover more than banks, he said.
"Looking beyond the current crisis, the United States … needs improved tools to allow the orderly resolution of a systemically important non-bank financial firm, including a mechanism to cover the costs of the resolution," he said.