Stephen Roach is not pleased with Obama's nomination of Ben Bernanke as the next Fed chair. Despite this outcome, Roach is hopeful that this decision will create a national debate on what should be the objectives U.S. monetary policy going forward:
The Bernanke reappointment is a welcome chance for a broader debate over the conduct and role of US monetary policy. Mr Obama has made sweeping proposals that give the Fed broad new powers in managing systemic risks. I argued in the Financial Times 10 months ago that the Fed should not be granted these powers without greater accountability as required by a “financial stability mandate” – in effect, forcing the Fed to shape monetary policy with an aim towards avoiding asset bubbles and imbalances. Without a revamped policy mandate, it is conceivable that we could face another destabilising crisis.I hate to sound like a broken record, but a nominal income targeting rule would go a long way in improving financial stability.