The Power and Independence of the Federal Reserve

Conti‐Brown, Peter

doi:10.1515/9781400873500

Cited by 118 publications

(6 citation statements)

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“…Before the global crisis, courts rarely reviewed or interfered in matters decided by the central bank. 10 In some cases in the United States, even though some actions and decisions of the Federal Reserve on regulation, financial stability and payment system have been subject to judicial review, there is still no mechanism to review the actions and decisions of the Federal Reserve monetary policy 11 . Unlike the United States, in the EU, the judicial system has the power to rule on the discretion or expertise of the central bank.…”

Section: The Unfair or Unfair Legal And Policy Situations Of The Cent...mentioning

confidence: 99%

On the Assumption and Improvement of the Judicial Review Mechanism About the Central Bank

Dong

2023

SLJ

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Generally speaking, judicial power and administrative power are two important national public powers in a country. It is precisely because of their respective powers that they need to form a check and balance relationship between them. The central bank, as an institution holding the important decisions of national monetary policy and national economic development, its relationship with the government ais either independent or subordinate to the government. It is a special administrative and financial institution. If some of its decisions and decisions are contrary to the national economic development goals, there should be a review mechanism that can review its decisions and decisions in advance to prevent the harm. The core of judicial review is judicial power, and the decision-making of the central bank belongs to the embodiment of administrative power. The check and balance of judicial power over administrative power is a new trend in new fields. This paper discusses the necessity, degree and scope of judicial review by the central bank, and the necessity of establishing a separate special institution, it provides some ideas for the construction of such a special judicial review institution.

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Section: The Unfair or Unfair Legal And Policy Situations Of The Cent...mentioning

confidence: 99%

On the Assumption and Improvement of the Judicial Review Mechanism About the Central Bank

Dong

2023

SLJ

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“…Upon its foundation, the Fed was intended to be an autonomous entity, designed following the Bank of England's model, that was supposed to be discounting firms' short-term commercial debt, but due to two world wars and massively extended sovereign debt issuance ended up supporting the Treasury bond market. The Treasury-Federal Reserve Accord of 1951 reestablished the Fed's policy autonomy (Conti-Brown, 2016) and introduced what we see as reciprocal liquidity and solvency guarantees of Fed and Treasury. The degree of fiscalmonetary cooperation changes over time and arguably with the financial cycle.…”

Section: Monetary Architecture As a Conceptual Frameworkmentioning

confidence: 99%

Monetary architecture and the Green Transition

Murau,

Haas,

Guter-Sandu

2023

Environ Plan A

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How to finance the Green Transition toward net-zero carbon emissions remains an open question. The literature either operates within a market-failure paradigm that calls for carbon taxes or cap-and-trade to help markets correct themselves, or via war finance analogies that offer a “triad” of state intervention possibilities: taxation, treasury borrowing, and central bank money creation. These frameworks often lack a thorough conceptualization of endogenous credit money creation and disregard the systemic and procedural dimensions of financing the Green Transition. We propose “Monetary Architecture” as a more comprehensive framework that perceives the monetary and financial system as a constantly evolving and historically specific hierarchical web of interlocking balance sheets. Using the United States as a case study, we stress the importance of a systemic financing dimension that uses all available elasticity space in the monetary architecture while considering a division of labor between firefighting balance sheets such as central banks or treasuries and workhorse balance sheets such as off-balance-sheet fiscal agencies or shadow banks. Procedurally, public workhorses should provide an initial balance sheet expansion and crowd in the rest of the monetary architecture, notably shadow banks, for long-term funding. Firefighters should prevent systemic instability and manage a possible final contraction.

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“…The use of discretion and a lack of commitment were good descriptions of monetary policy in the 1970s, when the Federal Reserve would back down on fighting inflation once unemployment became high because the Fed thought the social costs were too high to bear politically. 37,38 The Minneapolis Fed's connection to this work was both direct and indirect. Thomas Sargent and Neil Wallace were advisers to the Minneapolis Fed in the 1970s, where they worked out many of the implications of rational expectations for monetary policy.…”

Section: The Federal Reserve Bank Of Minneapolis: Rational Expectatio...mentioning

confidence: 99%

Federal Reserve Structure and the Production of Monetary Policy Ideas

Bordo,

Prescott

2023

Working Paper (Federal Reserve Bank of Cleveland)

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We evaluate the decentralized structure of the Federal Reserve System as a mechanism for generating and processing new ideas on monetary policy over the 1960 - 2000 period. We document the introduction of monetarism, rational expectations, credibility, transparency, and other monetary policy ideas by Reserve Banks into the Federal Reserve System. We argue that the Reserve Banks were willing to support and develop new ideas due to internal reforms to the FOMC that Chairman William McChesney Martin implemented in the 1950s and the increased ties with academia that developed in this period. Furthermore, the Reserve Banks were able to succeed at this because of their private-public governance structure. We illustrate this with a time-consistency model in which a decentralized organization is better at producing new ideas than a centralized one. We argue that this role of the Reserve Banks is an important benefit of the Federal Reserve’s decentralized structure by allowing for more competition in formulating ideas and by reducing groupthink.

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The Power and Independence of the Federal Reserve

Cited by 118 publications

References 0 publications

On the Assumption and Improvement of the Judicial Review Mechanism About the Central Bank

On the Assumption and Improvement of the Judicial Review Mechanism About the Central Bank

Monetary architecture and the Green Transition

Federal Reserve Structure and the Production of Monetary Policy Ideas

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