WASHINGTON (Reuters) - Federal Reserve Board Vice Chair Stanley Fischer on Tuesday warned that the U.S. central bank must remain vigilant in monitoring financial stability risks.
"While significant progress has been made in recent years toward making the financial system more stable and resilient, we should not ever be complacent," Fischer said in prepared remarks to an International Monetary Fund workshop on financial surveillance and communication in Washington.
The event was closed to the media but his speech was published by the Federal Reserve.
Fischer also said that parts of the financial system deserved extra scrutiny. He noted that the Federal Reserve still lacks sufficient insight into aspects of the shadow banking system and that rising subprime auto and student loan balances and delinquency rates were worrying trends.
At first glance such loans appear to be a small enough share of debt to be of little cause for alarm, he noted.
"But, on second thought, one should remember that pre-crisis subprime mortgage loans were dismissed as a stability risk because they accounted for only about 13 percent of household mortgages," Fischer said.
Elsewhere, the Fed's number two in command said that risks associated with liquidity and maturity transformation were relatively low and that high-risk appetite had not led to increased leverage across the financial system.
Overall "a range of indicators point to vulnerability that is moderate compared to past periods," he said.
Fischer went on to say that new financial technologies will likely carry new risks.
Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama