Bessent Appoints Judy Shelton as Senior Adviser on China Currency Policy

Key points

• Treasury Secretary Scott Bessent named Judy Shelton as a senior adviser in his office, with a specific focus on China.
• Shelton will advise the Secretary on currency policy and evaluate financial conditions in China, according to the Treasury Department.
• The appointment does not require Senate confirmation, allowing the administration to bypass the bipartisan opposition that stalled her Federal Reserve nomination in 2020.
• Shelton is a well-known advocate for tying the dollar to gold, a policy the U.S. abandoned in 1971, which puts her at odds with mainstream economists.
• Most economists argue that a gold standard would limit the Federal Reserve's ability to respond to financial crises, though Shelton has stated such a shift is not imminent.

Background

This appointment follows recent developments involving the Federal Reserve and China, including the conviction of former Fed advisor John Rogers for lying to investigators in a Chinese espionage case, which highlighted security vulnerabilities within the Fed. Additionally, Treasury Secretary Scott Bessent has been a central figure in AI policy discussions, including high-level talks with China at the UN, and was recently considered for the role of AI czar, though President Trump rejected him for that specific position.

Why it matters

The appointment of a gold standard advocate to advise on China signals a potential shift in U.S. monetary policy and its approach to Chinese financial conditions. It may influence currency stability and the Federal Reserve's operational flexibility, while also reflecting the administration's broader strategy in dealing with China's economic and financial influence.

What to watch

The Treasury Department will likely monitor Shelton's recommendations on China's financial conditions and currency policy. There may be further developments in U.S.-China economic relations, and the administration may continue to explore alternative monetary policies, though Shelton has indicated that a return to the gold standard is not imminent.