Brimmer Urges New Controls On Multinational Bank Activity
. g^QNTX), Dec. 28ÛÓA small number of very large American banks has become sa.heavily involved in international finance that traditional controls over the U.S. economy are no longer adequate, a Federal Reserve Board governor /warned today.</br></br>Evolution of the commercial banking system in the last decade, said Andrew F. Brimmer, has altered the flow of funds, changed the impact, of monetary policy and placed strains on instruments of central banking.</br></br>At the core of the problem, he continued, are U.S.-based multinational banks that constitute the base of the domestic money markets but also are heavily involved in international finance.</br></br>The end result of their ventures abroad, Brimmer Ûª told the combined conventions of the American Economic Association and American Finance Association, is that the U.S. financial system ÛÏhas become much more open to the influence of foreign financial developments than was the case a decade ago.Û</br></br>Brimmer said efforts to ÛÏrectify this situation should not be delayed much longer,Û and he suggested two possible paths of action: Û¢	More flexible use of reserve requirements for commercial banks ÛÓ money that must be set aside for various contingencies and not loanedÛÓbased on total assets and involving a broad range of liabilities.