Recently, attention is focused on the possibility that Steven Miran, who was nominated for the new board position of the Federal Reserve (Fed) and is the Chairperson of the White House Council of Economic Advisers (CEA), could actually push for the Fed reforms he advocated in the past. Miran proposed extensive reforms to strengthen the political independence of the Central Bank in a report co-authored with the Manhattan Institute last year. The proposal seeks to restructure the current organization of the Fed and transform the Central Bank to reduce political control and inefficiencies.
According to foreign media such as the Wall Street Journal (WSJ) on the 7th (local time), Miran criticized the current structure of the Fed, which is influenced by political bias, in his report, arguing that its independence needs to be further strengthened. He suggested that the system, which protects Fed board members from termination after their 14-year term, should be reformed. Instead, Miran proposed reducing board members' terms to 8 years and allowing the president to dismiss them as desired, thereby providing a way to address the 'revolving door' issue between the administration and the Federal Reserve.
Miran also proposed ways to expand the voting rights of the Fed. He suggested allowing all Fed boards and some Federal Reserve Bank presidents to vote in all Federal Open Market Committee meetings, as well as strengthening the governors' control over the election of regional bank presidents, so that the policies reflect the uniqueness of each region. Through this, he argued that it could balance the president's influence and reduce political pressure on the Central Bank.
Miran also suggested structural changes to free the Fed's senior executives from arbitrary dismissals by the White House and to ensure that board members cannot work in the administration for 4 years after their terms end. He emphasized that this would allow for a more accountable Central Bank policy through democratic processes.
Miran's proposals could bring significant changes to the relationship between the Fed and Congress. In particular, it is expected to have a significant impact on the process of the Senate approving Fed nominees. As a result, some Republican lawmakers oppose the notion that Fed appointments should be under the president's influence. If Miran's proposals are implemented, substantial changes are expected in the operation of the Fed's board.
Miran also argued for reforms to have the Central Bank's budget management directly established by Congress, advocating for a further separation from the current system to strengthen political independence. This is because it could restore the independence of the Fed and provide opportunities for it to operate in a more efficient and democratic manner.
Experts are expressing various opinions regarding Steven Miran's nomination to the Fed board. Mark Chandler, a market strategist at Bannockburn Global Forex, noted, '(Miran) has extensive economic experience and is well-qualified to serve as a Fed board member.' Jay Hatfield, a researcher at Infrastructure Capital Management, mentioned, 'Miran has an unconventional background, but he could be a practical choice during a short term.'
However, some critical voices have emerged. Andrew Brenner, a senior strategist at market analysis firm National Securities, pointed out, 'Miran lacks practical experience and may struggle to pass Senate confirmation.' Mark Spindel, a researcher at MarketWatch, assessed that 'if Miran's proposals are followed, his short term would likely limit his influence.'