The Federal Reserve Board of Governors member Milan calls for prioritizing reforms in bank regulation, stating that cumbersome rules hinder industry development.

According to Jincai Finance, Federal Reserve Board of Governors member Stephen Milan stated that he hopes the Fed will first readjust a series of regulatory rules concerning Wall Street before discussing other economic issues related to the Central Bank's balance sheet. “For many years, financial regulation has essentially moved in one direction, continuously tightening restrictions on the banking industry,” Milan stated in remarks prepared for the Bank Policy Institute on Wednesday. He added that the interaction between regulation, financial markets, the economy, and the implementation of monetary policy is often underestimated. “While discussions surrounding bank reserve balances and their interest, balance sheet composition, and government bond market intermediaries are numerous, I believe these discussions are mostly downstream issues of the banking regulatory framework,” he said. Milan emphasized that regulators should avoid overreacting, stating that the rules enacted after the 2008 crisis have gone too far. He pointed out that this has led to many traditional banking activities falling outside the regulatory realm, partly due to “burdensome rules.” “While I have no bias against non-bank financial companies, credit allocation should be driven by market forces, not regulatory arbitrage,” he said.