NY Fed's Williams stresses importance of financial markets resilience

FILE PHOTO: John C. Williams, president and CEO of the Federal Reserve Bank of New York speaks to the Economic Club of New York in the Manhattan borough of New York, U.S., March 6, 2019. REUTERS/Lucas Jackson

(Reuters) - Financial market conditions deteriorated in March to levels near or worse than those seen during the 2008 economic crisis, and it is important to study the causes of that volatility and determine ways to shield the system from future shocks, New York Federal Reserve Bank President John Williams said on Tuesday.

“We need to understand how changes in the market ecosystem —whether due to regulation, technology, or other factors — have influenced market resilience,” Williams said in remarks prepared for the U.S. Treasury Market Conference.

The Fed helped to stabilize markets after bouts of volatility last September and in March by conducting large-scale operations in the market for repurchase agreements, or repo, and by purchasing Treasury securities and mortgage-backed securities. Studying those scenarios can help lead to reforms that can make the financial system stronger, Williams said.

“It’s crucial that our financial system can handle shocks and disruption,” he said.

Williams did not comment on his outlook for the economy or monetary policy in his remarks.

Reporting by Jonnelle Marte; Editing by Andrea Ricci