Waller urges system-wide modernization of Federal Reserve operations

Governor Christopher J. Waller argues for modernizing Fed operations by centralizing non-local functions (IT, HR, finance, procurement, vendor management, payments, and IT) under System leadership while preserving district-based roles important for monetary policy input, supervision, and local economic outreach. He outlines two models: (1) standardization with centralized System leadership that preserves Reserve Bank footprints, and (2) a more centralized, potentially outsourced design with consolidated facilities. The shift aims to cut costs, reduce risk, improve cybersecurity, and attract national talent, leveraging AI where appropriate. It requires delegating operational decisions from 12-way consensus to System leaders. While decentralization is a strength, this plan argues for standardizing what can be standardized to strengthen the Fed’s efficiency and resilience without erasing necessary regional distinctions. Some Reserve Banks could see job reductions as the footprint changes, but the goal is a more integrated, scalable Federal Reserve.”,