Charging that regulation stymies innovation, Federal Reserve Board Chairman Alan Greenspan said Thursday the government should rely more on the market to police financial institutions.

"We have no choice but to harness market forces," Mr. Greenspan said. "The appeal of market-led discipline lies not only in its cost- effectiveness and flexibility, but also in its greater adaptability to changing financial environments."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.