The structure of the Federal Reserve should not be changed lightly, as it achieves a practical balance that serves the country well, board Gov. Jerome H. Powell said in a policy speech Tuesday.
“Throughout our history, Americans have questioned the structure and even, at times, the need for a central bank,” Powell said in remarks at the West Virginia University College of Business and Economics in Morgantown. “Current discussions of Fed reforms echo these past debates. But it is important to understand that history in both advanced and emerging economies across the world has consistently demonstrated the need for a central bank, and both the existence and the structure of the Federal Reserve are products of that historical experience.”
Powell also noted that the Fed Board has recently expanded its transparency with frequent public speeches and other communications, and that communications with Congress and the public are critical to the Fed’s institutional accountability and transparency, as well as “essential complements to its independence.”
“I believe that support for the Federal Reserve as a public institution is sustained by the public expression of our diverse views,” he said, reflecting on the structure of the Federal Reserve System, made up of district banks and a central board for oversight. “It is important that Federal Reserve officials regularly demonstrate that the Fed has been appropriately pursuing its mandated goals. Transparency can also make monetary policy more effective by helping to guide the public’s expectations and clarify the (Federal Open Market) Committee’s policy intentions.”