Why the Federal Reserve Must Become the World's "Dealer of Last Resort"

That's the prognosis from Credit Suisse AG Director of U.S. Economics Zoltan Pozsar, who contends that the U.S. central bank needs to take a much more activist approach to ensuring adequate availability of the world’s reserve currency in light of recent regulatory changes that have raised bank funding costs and constrained sources of dollar funding.

The liquidity financial institutions can draw upon has been drained by new rules that require banks to hold vast buffers of easy-to-sell assets, on the one hand, and a larger-than-expected exodus from prime money-market funds linked to financial reforms implemented in October, on the other. That's induced a pick-up in bank funding costs that looks to be permanent, the analyst said.