Source: Wall Street
Bernanke believes that the United States may be at risk of financial stability, but it will not become the way it was during the 2008 crisis. His concerns come from overseas, such as the impact of the conflict between Russia and Ukraine on Europe and the pressure of a stronger dollar.
After winning this year's Nobel Prize in economics for economic crisis research and two other American economists, former Federal Reserve Chairman Ben Bernanke urged policy makers to pay attention to the risk of a deteriorating financial environment.
In his first public speech since winning the award on Monday, October 10, US Eastern time, Bernanke said:
"even if the financial problem does not start to become an important event, it worsens the financial environment over time and may exacerbate the problem, so I think this is something we must pay close attention to."
As head of the Fed between 2006 and 2014, Bernanke set a precedent for the Fed to act quickly and forcefully in response to economic shocks. During the 2008 financial crisis, his Fed continued to cut interest rates, cut policy rates to ultra-low levels close to zero, and bought bonds through quantitative easing (QE) to stimulate the economy with helicopter-style super-easing to avoid further deterioration of the US and global economy.
Bernanke said on Monday that the current U. S. economy bears no resemblance to that of the crisis before 2008. The banking sector as a whole is in better shape than it was during the economic crisis in 2008.
Bernanke believes that the current rise in home equity in the United States helps to provide protection for home buyers. Non-bank credit institutions need to be given the same attention as banks at the same time.
Bernanke's main concern this time is outside the United States. In Europe, for example, financial institutions may be under pressure from Russian gas supply disruptions related to the conflict between Russia and Ukraine. He also noted that a stronger dollar is putting pressure on economies and that emerging markets "are facing a very strong dollar and large capital outflows.
Bernanke said adjusting the Fed's inflation control target would damage the Fed's policy credibility. Although there may be some financial stability risks in the United States, "We will certainly not be in trouble as we did 14 years ago (that is, 2008)."
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