http://www.nytimes.com/2014/11/08/business/yellen-calls-ecb-review-of-banks-a-confidence-booster.html 2014-11-07 20:11:55 Yellen Calls E.C.B. Review of Banks a Confidence Booster The Federal Reserve chairwoman, speaking in Paris, appeared to disagree with critics who have questioned the rigor of a recent eurozone audit. === PARIS — Janet L. Yellen, chairwoman of the Federal Reserve, on Friday praised a Some analysts have questioned whether a health check of banks completed last month by the European Central Bank was rigorous enough, but speaking at a conference in Paris, Ms. Yellen appeared to disagree. “The recent comprehensive assessment is an important step toward building confidence,” Ms. Yellen said. Ms. Yellen did not comment directly on the European Central Bank’s signals Thursday that it was Ms. Yellen spoke at a symposium sponsored by the Bank of France, where prominent central bankers, economists and asset managers tried to come to grips with a financial world that functions in a much different way than before the crisis that began in 2008. Other speakers included Haruhiko Kuroda, governor of the Bank of Japan; Laurence D. Fink, chief executive of the asset manager BlackRock; and Mark Carney, governor of the Bank of England. Ms. Yellen appeared on a panel that included Christine Lagarde, managing director of the International Monetary Fund; and Raghuram Rajan, governor of the Reserve Bank of India. While highly academic, the sessions highlighted how little consensus there is among the experts about issues like the optimal level of inflation, the risks that may lurk in a world where interest rates are close to zero, and what central banks should be doing to help growth and prevent future crises. “Nothing works and we don’t know why,” quipped Jacob A. Frenkel, chairman of JPMorgan Chase International, attributing the idea to Albert Einstein. The session came a day after the European Central Bank made its strongest commitment yet to pump money into the eurozone to prevent deflation, a destructive decline in prices. The central bank indicated it would aim to increase the total value of its balance sheet — the sum of its gold, loans outstanding and other assets — by 1 trillion euros. Analysts say that commitment will eventually force the European Central Bank to buy government bonds on a large scale, as other central banks have done to stimulate their economies when official interest rates were as low as they could go. While Ms. Yellen was restrained in her comments on European Central Bank policy, Ms. Lagarde repeated calls for it to do more. “All levers should be used and all available policies should be implemented,” Ms. Lagarde said, in a clear reference to the bank. Mohamed A. El-Erian, chief economic adviser at the German insurer Allianz, argued during a separate talk that the risk that stimulus measures would create inflation was not as great as the risk of doing nothing. “The trade-off is not between doing something now and inflation down the road,” Mr. El-Erian said. “The trade-off is between not doing something now and taking a high risk of financial instability later.” William C. Dudley, president of the Federal Reserve Bank of New York, spoke about whether central bankers from different countries should try to coordinate their policies. While formal coordination probably would not work, he said, the Fed considers the effect on the rest of the world when it sets policy. “Our mandate has a domestic focus,” he said. But added: “We are mindful of the global effects of Fed policy.”