Question

Legislation has just been proposed to permit each President to replace the Federal Reserve Board, and also to have the Board report directly to (and be accountable to) the President.   As a leading economist, you’ve been asked for insight into the likely impacts of such a change.

How does this proposal compare to other major Central Banks that we’ve studied, and their organization? What risks and what benefits might be expected from such a change?

Answer 1

The Fed has taken a “just say no” stance on all pending legislation. But Mr. Powell opened the door a crack to alternatives–presumably alternatives that don’t require legislation – that would strengthen Congress’ ability to hold the Fed accountable. “I would welcome discussions with the Congress about ways to aid its important oversight of monetary policy,” he said. “There may be differing views of how Congress can best carry out this responsibility, but there can be no disagreement about the purpose of such oversight, which is to help the Federal Reserve succeed in promoting a healthy economy and a strong and stable financial system.”