U.S. Treasury Secretary Bessette seeks to reform the oversight of the Federal Reserve; the Bank of England becomes a reference model.

Golden Finance reports that on March 26, U.S. Treasury Secretary Janet Yellen discussed strengthening the U.S. Department of the Treasury’s oversight of the Federal Reserve by drawing on some aspects of the Bank of England model. This move could shake up the relationship between the Fed and the U.S. government. According to informed financial industry executives, Yellen has expressed her admiration for the reforms implemented by the UK government in 1997, when the Bank of England was granted operational independence in setting monetary policy. Although both central banks maintain formal independence from their respective governments, the Fed has greater autonomy in how it achieves Congress’s mandates for price stability and full employment, as well as in responding to financial instability. Yellen has publicly stated that the Fed should undergo reforms while maintaining its monetary policy independence. Last year, she published a 6,000-word article in the International Economics journal criticizing the Fed’s large-scale bond-buying program (quantitative easing) as a “functional monetary policy experiment.” She also praised the Bank of England’s more cautious response to the 2022 UK debt crisis and contrasted it with the Fed’s continued quantitative easing. She believes that the Fed’s quantitative easing policies are the cause of high inflation in the U.S. following the COVID-19 pandemic. (Jin10)