Leading US central bankers will no longer be allowed to buy shares in individual companies. The Federal Reserve, the central bank of the United States, has enacted new rules for the financial market operations of its senior members. Accordingly, bonds from individual companies are taboo, as are individual bonds and derivatives. Only diversified investments such as funds are allowed.
“These stringent new rules are setting new standards to reassure the public we serve that all of our senior officials are focused solely on the Federal Reserve’s public mandate,” said Federal Reserve Chairman Jerome Powell. Even the appearance of a conflict of interest should be avoided.
As a further precautionary measure, those affected would generally have to register planned transactions 45 days in advance and have them approved. In addition, the Fed members must generally hold their investments for at least a year.
About six weeks ago reports of high-ranking Fed members’ financial affairs caused outrage. Two of the twelve presidents of regional Fed branches resigned in this context. It was about their investments in 2020, when the Fed tried to mitigate the effects of the corona pandemic with massive economic aid.