WASHINGTON (Reuters) – U.S. Federal Reserve Vice Chair Randal Quarles said Wednesday that how the Fed supervises large banks may have contributed to recent turmoil in overnight financial markets.

Testifying before Congress, Quarles said the Fed is reviewing supervisory practices, including internal liquidity stress tests, that may have discouraged banks from investing in those repo markets. He said those supervisory issues were not solely responsible for market issues, and added he did not believe the Fed’s regulations were a major contributor.

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