WASHINGTON -- Former Federal Reserve Chairman Paul Volcker Wednesday told lawmakers that central bank's role in overseeing financial markets needs to be more clearly defined and that the role of rating agencies, sovereign wealth funds and hedge funds should be weighed.

"Large commercial banks have themselves taken on important characteristics of investment banks, but the investment banks and hedge funds that have come to dominate the trading, if regulated at all, have not been closely supervised with respect to their safety and soundness," Volcker told the Congressional Joint Econcomic Committee.

Volcker said the Fed's role in supervising financial markets needs to be made clearer and that oversight of credit rating agencies, hedge funds and sovereign wealth funds should be weighed.

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