Sharpening its supervision of international financial activities, the Federal Reserve Bank of New York said Friday it named Terrence Checki to the newly created position of executive vice president in charge of emerging markets.
Mr. Checki, 50, is a veteran New York Fed official and former senior vice president in charge of international banking supervision. He becomes the eighth executive vice president at the New York Fed.
In an interview last week, Mr. Checki noted that the "large and growing emerging markets are becoming of increasing interest to major international and U.S. banks." He said capital flows to emerging markets have increased tenfold to $109 billion annually since 1990, and from $9 billion in the 1980s.
"This has obviously become an area of great importance," Mr. Checki said. "We want to make sure we give it the proper focus."
The Washington-based Federal Reserve Board and the regional Federal Reserve banks have gradually been stepping up their involvement in emerging markets since the early 1990s and have also boosted contacts with central banks in those markets. These actions followed a move by Congress, in 1991, to approve tougher requirements for foreign banks seeking to enter the United States.
Earlier this year, the Fed and other U.S. government financial regulatory agencies, along with international financial authorities like the Bank for International Settlements, dramatically increased their involvement by helping to arrange a $50 billion bailout for Mexico after that country's financial markets nearly collapsed in December 1994.
Mr. Checki dismissed speculation that the move to set up a special unit at the Fed to monitor emerging markets reflected growing concerns about increased volatility in the global world financial system.
He said the new unit merely represented a realignment of existing operations that reflected the changing nature of international markets.
However, he did say that "there are important issues that relate to the functioning of the global economy, the banking sector, and the financial system ... You know how quickly things develop. You've got be in a position to react quickly, and even more to anticipate developments."
He added that the unit's responsibilities will include compiling and assessing political, economic and financial data to be used to identify problems that might arise.
Market participants welcomed the nomination and noted that Mr. Checki's expertise made him the most logical candidate for the position.
"Terry Checki is one of the most experienced, savvy guys in emerging markets inside the Fed or outside of it," said Michael Chamberlin, executive director of the New York-based Emerging Market Traders Association. "If they're setting up a new unit, he's the perfect choice to head it."
However, some analysts said the effort may be an example of the New York Fed's responding with too little, too late.
"The Fed and Treasury got caught flat-footed by the Mexican crisis, so this is really just a long-delayed adjustment for setting up a mechanism to deal with emergencies," said Gary Kleiman, president of the Washington- based firm Kleiman International Consultants.
He said that, so far, neither the Bank for International Settlements nor any of the other top coordinating agencies, like the G-10 group of countries, have shown any indication they are planning to open their ranks to include emerging market countries as members.
Mr. Kleiman also noted that the Fed's new unit will be useless unless it tracks data from profit-making institutions in the emerging markets.
"The private sector is driving this market, and the government proved during the Mexican crisis that it didn't understand or know how to respond to private-sector capital flows," Mr. Kleiman said.
"We're not involved in theoretical discussions any more," he declared, "and what they really should be doing is revamping the entire international regulatory apparatus to monitor both private and public emerging-market institutions."