Mark Carney: preference

Transcript context

…Let’s say we put you in charge of our central bank, the Fed. How would you change governance? Not monetary policy, not regulation, but the actual structure of the Federal Reserve System? That is a really tricky one. There’s path dependence in all regulatory frameworks in central banks. The rotating regional Fed chair — I understand why the regional Feds exist, but the rotating chair system, I probably would not have that. I would have a clearer obligation on the Federal Reserve to identify and use its tools to address financial stability risks. Ultimately, that’s housed in something called the FSOC chaired by the Treasury secretary, but I would have the Fed more on the hook. I think they’d be happy with this for identifying what can go wrong and what should be done about it. I’m not saying add powers to them in order for that to be the case. What we would like to see — look, I thought the system — and I’m a prisoner of my past, but the system in the UK, where there was quite a rigorous independence of the committee members on what’s called the Monetary Policy Committee, the equivalent of the FOMC, and they felt individual responsibility, they definitely would vote in different ways than the governor. They didn’t feel the need to have a consensus that was consistent with what the governor thought because they were individually on the hook for their votes and knew how people had voted. And that led to quite robust discussions, in a healthy way, about the outlook for the economy. The Fed has elements of that, but it also — and sorry, I’ll finish on this topic, which is, it has a tradition or a convention that is more consensus based than we had in the UK. Thinking of central banks just as autonomous institutions, putting aside monetary policy, putting aside regulation, just running them — what’s the greatest challenge?…

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