Fed's Waller says two models for further evolution of Fed regional bank system is worth considering
Importance
Level 1
- Traditional organic evolution of Fed regional bank operations will not meet the moment.
- Need to do more to centralize regional reserve bank operations into national lines of business.
- First model is standardization with centralized system leadership and key support functions under a single senior leader.
- Second model would involve physical consolidation across key functions that do not need to be local.
- Either model represents a meaningful step forward.
- Second model implies regional banks may face lower employment levels in the future.
- Need greater agility to capture efficiencies and manage risks, including incorporating artificial intelligence into system processes.