U.S. Fed vice chair rules out obvious financial stability risks in near term

U.S. Federal Reserve Vice Chairman Stanley Fischer said Friday that he did not see acute risks to financial stability in the near future, but emphasized his concern that the central bank's macro-prudential toolkit is not large and not yet battle tested.

"Banks are well capitalized and have sizable liquidity buffers, the housing market is not overheated, and borrowing by households and businesses has only begun to pick up after years of decline or very slow growth," said the central bank official at an event held by the Federal Reserve Bank of Boston.

Fischer warned that potential shifts of activity away from more regulated to less regulated institutions could lead to new risks and that the United States still lacks a macroeconomic toolkit to address a cyclical buildup of financial stability risks.

As the macro-prudential toolkit is limited, it may be left to monetary policy to curb risks to financial stability, he said, adding that the deployment of monetary policy comes with significant costs. Endi