Fed's Fischer warns against complacency over financial crisis

Stanley Fischer, the vice chairman of the Federal Reserve, said the US central bank should not rule out using monetary policy to fight financial instability.

Policymakers remained uncertain as to whether regulatory powers alone could sustain the economic environment.

"Regulations have been strengthened and the bankers' backlash is both evident and making headway," Fischer said at the International Monetary Conference in Toronto.

"But often when bankers complain about regulations, they give the impression that financial crises are now a thing of the past, and furthermore in many cases, that they played no role in the previous crisis."

The Fed vice president warned that monetary stimulus could lead to financial instability, adding that policymakers should not underestimate the risk of another financial crisis.

"We should not make the mistake of believing that we have put an end to financial crises," he said.

"One reason we should worry about future crises is that successful reforms can breed complacency about risks."