The government should require large banks to issue subordinated debt at least once a year and mandate more disclosures to encourage more market discipline of the banking system, a Federal Reserve Board governor said Monday.

"We ought, where we can, to skip the middlemen and go right to our first line of defense: market discipline," Fed Governor Laurence H. Meyer said at a conference in New York on reforming bank capital standards. "It is perhaps the most flexible option for maintaining bank safety and soundness in a rapidly evolving environment and has the potential to strengthen and complement bank supervision."

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