A plan announced Friday would give the U.S. Federal Reserve more authority to monitor financial markets and intervene when stability is threatened.

The Treasury Department is to introduce the detailed proposal Monday, The New York Times reported. It would need approval from Congress.

The summary plan avoids suggestions of increased regulation of financial markets and institutions. The proposal includes no new rules for hedging and risk swaps, which currently have little regulation.

The Securities and Exchange Commission would become less prominent, merged with the Commodity Futures Trading Commission. The Treasury Department suggests that stock exchanges should have more power to regulate themselves.

The department began work on plans to revise regulation last year, under orders from Treasury Secretary Henry Paulson Jr.

I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years, Paulson is to say Monday, a draft of his proposed speech indicates. I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible.

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