The U.S. Federal Reserve prepares to reduce bank's dependence on short-term debt funding, as well as its capital surcharges for the biggest banks will certainly be harder than internationally agreed rules, a top Fed official said on Monday.

In his clearest statement of the Fed's strategies so far, Governor Dan Tarullo claimed the reserve bank is working with 3 different collections of measures after unstable funding ended up being a significant cause of the 2007-09 financial crisis.

'We believe that additional should be done to defend against short-term retail funding risks ... volumes are still large relative to the size of the financial system,' Tarullo said in notes gotten ready for testament at a hearing in the Us senate Banking Committee on Tuesday with other regulators.

Retail funding markets, in which banks lend each various other money for short periods, occasionally lasting simply days, were a key factor in the death of financial investment bank Lehman Brothers, when panic rapidly spread out at the elevation of the 2007-09 crisis.

The Fed will require the largest banks, which are recognized as so-called systemically important banks, to hold even more equity capital proportionally to the quantity they depend on short-term funding, Tarullo said.

International rules will require these large banks to have a higher percentage of equity capital for every single dollar they obtain, and Tarullo claimed the Fed's policies for these banks would certainly be tougher than the international regulations.

The Fed is additionally preparing to set floors for security haircuts entailing repurchase agreements, protections financing and various other deals, to avoid extreme leverage from developing, Tarullo said.

Lastly, the Fed was working on proposed modifications to the so-called net-stable funding ratio, Tarullo said, a globally agreed procedure that needs bankings to match their assets with longer-term responsibilities such as customer deposits and also long-term personal debt. The alters would also aid check short-term financing markets.