Janet Yellen, the U.S. Treasury Secretary, expressed concerns about the commercial real estate sector, citing high interest rates and offices being vacated due to changing work models after the pandemic. However, she believes the situation is manageable.
Yellen made these remarks during a hearing of the U.S. House Financial Services Committee, discussing the annual report of the Financial Stability Oversight Council.
Highlighting her worries about commercial real estate, Yellen mentioned that banking regulators are focusing on this issue. She stated that regulators are working to ensure the creation of credit loss reserves to cover losses, the adequacy of dividend policies, and sufficient liquidity. Yellen also pointed out that the refinancing of commercial real estate loans coming due, especially with offices being vacated due to high interest rates and changing work models after the pandemic, could create significant stress on the owners of these properties.
“I’m concerned. Although some institutions are under quite a bit of stress due to this issue, I believe it is manageable,” said U.S. Treasury Secretary Yellen.
“Congress must pass a law to regulate stablecoins” Yellen emphasized that the economic strength of the United States is dependent on a strong and resilient financial system. She stated that the Financial Stability Oversight Council is monitoring various risks in 2023, including those arising from the commercial and residential real estate sector, global geopolitical conflicts, and technological developments.
Addressing the risks focused on by the Council, Yellen noted that the first is risks stemming from the banking sector and non-bank financial institutions.
Yellen highlighted efforts to evaluate and increase coordination on financial stability risks related to increasingly severe climate-related events. She also mentioned their focus on digital assets and related risks, such as transactions on cryptocurrency platforms and vulnerabilities arising from price fluctuations in the cryptocurrency market.
Regarding cryptocurrencies, Yellen stated, “Current rules and regulations should be applied, and Congress must pass legislation to regulate the spot market for stablecoins and non-security crypto assets.”
- Call for financial institutions to deepen expertise in artificial intelligence
Pointing out their focus on strengthening protections against cybersecurity risks, Yellen expressed support for the timely and actionable sharing of cybersecurity information, including ongoing partnerships between state and federal agencies and the private sector.
Yellen said, “The Council closely monitors the increased use of artificial intelligence in financial services, which provides potential benefits such as reducing costs and increasing efficiency, as well as potential risks such as cyber and model risks.”
U.S. Treasury Secretary Yellen emphasized that financial institutions, regulators, and market participants need to continue deepening their expertise and monitoring capabilities in the field of artificial intelligence.
source: aa.com.tr / prepared by Melisa Beğiç