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It is clear that there are functions of the financial system that must be performed, among them the allocation of capital and the setting of prices.
While this part of Dodd-Frank does give the council a lot of leeway in determining a systemically important activity, opponents of reform may argue that money funds simply aren't part of the payment functions of the financial system, which is what title VIII was written for.
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The functional approach classifies financial innovations according to their contribution to the functioning of the financial system, that is, their purpose.
But he also described the interbank lending market, which is crucial to the functioning of the financial system, as "dysfunctional," and acknowledged anxiety among investors.
The crisis has delivered a very different message: that credit analysis remains critical to the functioning of the financial system, whether securitised or not.
That, the minutes said, could lead the federal funds rate to fall below its target on occasion until "more normal conditions were restored in the functioning of the financial system".
Moreover, the stated objective, price stability, is far too narrow for a central bank, which should be concerned also with the stability and smooth functioning of the financial system.Second, the provision prohibiting the EU from levying taxes is inconsistent with current arrangements, whereby it determines and acquires taxes on imports.
But, as with similar tests of banks in the United States last year, it may take days or weeks to determine whether the tests will end banks' mistrust of one another's creditworthiness and encourage interbank lending, which is crucial to the normal functioning of the financial system and ultimately the overall economy.
European officials said there was a risk that weak enforcement in one of the bloc's 27 member states could undermine the stability and functioning of the financial system in another member, and that the severity of penalties and fines for market abuses varied widely across the bloc.
"The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system," it said.
That certainly can't be good for lending and the functioning of the financial system".
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