Quarles Calls It Quits
Randal Quarles has officially thrown in the towel and announced his resignation from the Board of Governors of the Federal Reserve System, effective at the end of December. In a letter that could make even Santa blush, Quarles expressed his intentions to leave the Fed, where he served as both a member and vice-chair for supervision since 2017. After four years of economic eye-rolling, he felt it was time to pack his bags.
The Countdown to Nominations
With Quarles’ departure, President Biden will have some chairs to fill—three to be precise. The Fed has seven members on its Board of Governors, each hand-picked by the sitting president and confirmed by the Senate. This is akin to musical chairs but with much larger implications for the economy. Add to that the anticipated exit of current vice-chair Richard Clarida in January 2022, and Biden is in for a game of ‘who’s next?’
A Changing Landscape
Historically, the Fed has seen its fair share of exits. Notably, former board members Daniel Tarullo and Stanley Fischer bid farewell in 2017. Jerome Powell’s term as Fed chair is also nearing its sunset in 2022. If Biden secures a second term in 2024, he might even get to choose Lael Brainard’s replacement when her term expires in 2026.
Biden’s Game Plan
At the recent COP26 Climate Change Summit, President Biden assured the public that he will announce his Fed picks “fairly quickly.” It seems like he’s aiming to kickstart the nomination process without cutting any corners. Talking to the press, he stated,
“I’ve given a lot of thought to it and I’ve been meeting with my economic advisors on what the best choices are.”
The Crypto Conversation
During his tenure, Quarles wasn’t shy about voicing his opinions on cryptocurrencies. He advocated for a careful regulatory framework to oversee the burgeoning crypto market. Surprisingly, he suggested that widespread crypto adoption might lead to “serious financial stability issues,” indicating a call for collaboration with banks to foster solutions for digital payments.
Current Crypto Climate
As the U.S. government approaches the world of digital assets, officials have been more vocal about the topic. While no digital dollar is currently on the table, Powell has mentioned the Fed is “working proactively to issue a CBDC,” conveying a sense of urgency that could best be summed up as ‘we’ll get there, but let’s take it slow.’
