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5/9/2017, 4:07 PM (Source: TeleTrader)
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Kashkari: We would again have to bail out big banks

The 'too big to fail' issue in banking in the United States remains relevant and if major institutions got into trouble again like a decade ago, the government would once more have to bail them out, according to Neel Kashkari. The president of the Federal Reserve Bank of Minneapolis said on Tuesday that big banks would beg to be saved and that they would be right as, like with a meltdown of a nuclear reactor, the downside risks for the overall society would be too large. A reactor must be stabilized, he told participants at the MN High Tech Association 2017 Spring Conference.

Kashkari, this year's voting member of the Fed's policy panel, reiterated doubling capital requirements would largely help tackle the issue of high risk in lending.

Asked about the bitcoin, the head of the central bank's subsidiary expressed doubt that the design that prevents the creation of excess units of the token is a solution against inflation and proliferation of other digital currencies. Anyone can launch "a Neel coin or a Bob coin" and "it is too soon to know where this is going to go," Kashkari underscored. The Fed's ninth district covers Minnesota, Montana, North and South Dakota, northwestern Wisconsin, and the Upper Peninsula of Michigan.

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