Could a Foreigner Run the Federal Reserve?

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The appointment of Canadian central bank chief Mark Carney to be the new Bank of England governor sets a precedent. Never has someone from outside the United Kingdom held the job. Chancellor of the Exchequer George Osborne pointed out that Carney is a “a subject of her majesty the Queen.” That is hardly true, even in the most technical sense. The precedent does raise the possibility that nations can raid across borders for central bank heads. Perhaps there is even a way to recruit someone from outside the United States to fill the shoes of Ben Bernanke, if and when he leaves.

Rumors in the press suggest that Bernanke will not stand for a third term when his present one expires in January 2014. President Obama probably believes there are plenty of American citizens who could hold the job and do it well. Several people in his administration who hold high level financial jobs would be candidates, as would current members of the Federal Reserve board and regional presidents.

Depending on how the economy does over the next two years, and what the impression of the Fed’s role is by then, the entire organization may have fallen out of favor. Carney was brought in as “new blood.” Who’s to say that “new blood” may not be in order at the end of Bernanke’s term.

Reuters columnist Felix Salmon recently pointed out that U.S. nationals will fill all the senior financial positions in the Obama administration when those who currently hold those positions leave. But, perhaps not. How long does it take for someone to become a U.S. citizen, if the president wants him to be one? A good question that someone who is an expert on the fast track to citizenship could answer.

The world of private sector finance has become completely international. Heads of private banks and financial firms, and people who run key operations at those firms, come from all over the world, based on the belief that the best person for the job is the best person for the job, no matter what his or her citizenship affiliation is.

Could the next Fed chairman come from outside the United States? The answer to that may not be entirely determined yet.

Douglas A. McIntyre

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