The head of the Federal Reserve Bank of Chicago said Friday that requiring financial institutions to hold more capital against inflating assets may be the best way to guard against price bubbles.

President Charles Evans said boosting capital requirements may be the most effective way to reduce systemic risk if the prices of assets such as real estate suddenly fell.

The measure, applied to some or all institutions, could cool an overheated market if there is concern about a price collapse.

His remarks were in the text of a presentation to a banking conference in Paris.

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