FOMC (The Federal Open Market Committee) has introduced a new rule and as per this new rule. The senior Fed officials are banned from trading in cryptocurrency and stocks as well.
This new rule was first made guidelines that were disclosed in October. The committee said that this step was necessary to maintain public confidence in the agency. This new rule was implemented post detecting some unusual trading activity from the top Fed officials back in 2020.
These activities were criticized by many, pointing out how such officials were acquainted with the information and trading that was not meant for the public. And these Feds were investing trillions to maintain the economy. Two official Fed members were allowed to make the investments. But the issue is that this appears to be a conflict of interest and places the Feds in an ethical dilemma.
Both the involved Feds official, president of Dallas Fed, Robert Kaplan, and president of Boston Fed, Eric Rosengren had resigned eventually.
As per this new rule, All the senior officials working with the agency are bound to dispose of all the impermissible holdings, in the given one-year period. Later, all the new officials will have to do the same within the 6 months.
The officials that are included in this rule are;
- Reserve Bank research directors
- FOMC staff officers
- first Vice Presidents
- Board division directors, those who were regularly present in Committee meetings
- deputy manager
- System Open Market Account manager