The United States Federal Reserve, a central banking system from the United States, will reportedly ban senior officials and policymakers from purchasing individual bonds and stocks, while also restricting active trading when an ethics scandal resulted in the resignation of two regional presidents and deflating the public trust in the central bank.
According to the central bank, senior Fed officials, including Washington governors, regional bank presidents, and senior staff, would be limited to acquiring diversified investment vehicles like mutual funds under the new regulations.
Other measures to avoid even the appearance of a conflict of interest through the timing of investment choices include giving 45 days' notice before selling and buying securities, getting prior permission for these kinds of transactions, and holding investments for a minimum of one year.
Furthermore, the Fed stated that no purchases or transactions will be permitted during times of heightened financial market stress.
Jerome Powell, the Chairperson of The Federal Reserve, stated that these stringent new regulations raise the bar substantially in order to guarantee to the public that all of the top officials from the Fed retain a unified focus on its public purpose.
The Fed stated that the twelve regional Fed presidents will be obliged to publicly report financial dealings within 30 days, a regulation that is currently in place for senior staff and Washington-based governors.
The regulations follow revelations that numerous Fed officials were purchasing and selling equities at a period when the central bank's measures were intended to promote market functioning, notably during the COVID-19 crisis.
Since the beginning of the COVID-19 pandemic, the Fed has acquired more than $4 trillion in bonds in order to boost the economy via liquidity and low-interest rates. It also purchased billions of dollars in corporate bonds from some of Wall Street's top names in an attempt to keep the market operating.