Having Stanley Fischer as the Federal Reserve’s vice-chairman would make a fine complement to incoming chief Janet Yellen.
The former Bank of Israel governor would provide a conservative balance to the new boss. He’d also boost the Fed’s global and crisis credibility. Tapping Mr. Fischer would be a savvy move by President Barack Obama, and Ms. Yellen would be smart to encourage him to come aboard.
Few economists have experience as robust at Mr. Fischer’s. He made his name as a prominent academic economist at the Massachusetts Institute of Technology.
As a professor, he mentored brilliant minds like current Fed chair Ben Bernanke, European Central Bank president Mario Draghi and former Council of Economic Advisers chairman Greg Mankiw.
But he eventually left the ivory tower to apply economic theory to the real world. That led him to high-ranking posts at the International Monetary Fund and World Bank. He also worked as a vice-chairman at Citigroup before his eight-year stint leading Israel’s central bank.
He wore those many hats well. At the IMF, he helped deal with both the Mexican and Asian financial crises in the 1990s. His direction also aided Israel in avoiding a deep recession after 2008’s global economic malaise. Those skills could help bolster some weaknesses in Ms. Yellen’s résumé.
On monetary policy, he would also be likely to provide some constructive tension. Mr. Fischer is by no means an inflation hawk.
He believes in – and used – aggressive intervention in economic disasters.
But he’s also pragmatic, suggesting that if he were appointed he would argue for reducing the impact of some of the Fed’s stimulus tools sooner than the more dovish Ms. Yellen.
Some lawmakers might balk at the idea of making a former Wall Street banker the Fed’s second-in-command – though his role at Citi was not connected to the ensuing crisis. Assuming the Senate proves not to be a hindrance, having a godfather of modern economics helping shape monetary policy would be a big win for the Fed and the United States.
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