• Deposit outflows from the banking system have stabilized. Things have been calm but monitoring carefully
• Bank lending standards have tightened somewhat , may be more tightening to come
• Not seeing anything dramatic enough to significantly change outlook for moderate growth, strong labor market and easing inflation
• Over time, there is risk that financial system sanctions linked to dollar could ‚undermine the hegemony‘ of the US dollar
• Sanctions do create desire by China, Russia and Iran to find an alternative to dollar

I find it interesting that Yellen said outflows from the banking ’system‘ have failed rather than saying outflows from small banks have stabilized. Jim Bianco highlights that yesterday mega-cap US banks jumped and small cap banks fell 2.1% in a sign that money is flowing in one direction without leaving the system.

This article was written by Adam Button at www.forexlive.com.