WASHINGTON, April 8 (Xinhua) -- Federal Reserve Chairman Ben Bernanke said Monday that the U.S. banking sector has grown much stronger since the financial crisis, which has contributed to the improvement of the overall economy.
"Today the economy is significantly stronger than it was four years ago, although conditions are clearly still far from where we would all like them to be," he said when addressing a financial markets conference sponsored by the Federal Reserve Bank of Atlanta.
"Because bank credit for households and businesses is critical to continued economic expansion, it is positive for the recovery that banks are also notably stronger than they were a few years ago," he noted.
He added that the results of the most recent stress tests and capital planning evaluations continue to reflect improvement in banks' condition.
Results released last month showed that 17 of the 18 largest banks passed the latest round of stress test, evidence that most U.S. big banks have enough capital buffers to withstand a deep economic recession.
The Fed oversees Wall Street's biggest banks, including Citigroup, Bank of America, JPMorgan Chase & Co., and Wells Fargo.
The Fed has performed periodic stress tests on the major banks it supervises since 2009.
Bernanke noted that U.S. banks, large and small, have generally improved their liquidity positions compared to pre-crisis levels. Bank' holdings of cash and high-quality liquid securities have more than doubled since the end of 2007 and now total more than 2.5 trillion U.S. dollars.
However, he added that in the area of liquidity and funding, continued improvement is still needed on some dimensions and the Fed would continue to increase the transparency of stress testing process and its assessments of bank's capital planning.
"One of the most important aspects of regular stress testing is that it forces banks to develop the capacity to quickly and accurately assess the enterprise-wide exposures of their institutions to diverse risks, and to use that information routinely to help ensure that they maintain adequate capital and liquidity," he said.
"The development and ongoing refinement of that risk-management capacity is itself critical for protecting individual banks and the banking system, upon which the health of our economy depends," he added.
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