President Biden has said he will appoint Lael Brainard as Vice Chairman of the Federal Reserve, the No.2 role at the Fed and who could give him a stronger mandate to influence everything from the cost of money to the future of digital money.

Ms. Brainard, who has been governor of the Fed since 2014, is already part of the inner circle of Jérôme’s political advisers. H. Powell, Chairman of the Fed. But her rise to the vice-presidency will make her Mr. Powell’s closest aide on monetary policy issues if confirmed by the Senate.

The vice president officially wields little power, but in practice, he’s regularly the person who comes up with new ideas in speeches and helps guide a Fed president’s thinking on political issues.

Ms. Brainard’s rise comes at a pivotal economic time. The Fed is wondering how to define its policy at a time when inflation has skyrocketed but millions of jobs are still missing. Like Mr Powell, Ms Brainard has been reluctant to react too quickly to high prices by raising interest rates to stifle growth, fearing that this would diminish opportunities in the job market. But both are watching the price path carefully, ensuring that high inflation does not become a lasting trend.

Ms. Brainard would be the third woman in the Fed’s 108-year history to hold the post, following in the footsteps of Janet L. Yellen and Alice Rivlin. Her new role would put her in a powerful position to influence the way forward for digital currency as the Fed considers whether to issue one, which some other global central banks have done or are doing. His higher position could also give him a greater chair as a bully on climate-related issues.

She has been one of the main proponents of a more active role for the Fed in ensuring that the financial system is prepared for the potential fallout from climate change. She delivered a speech at First Fed climate conference in 2019 and has recently focused on the need to climate scenario analysis for banks, which would test their resilience to extreme weather events, sea level change and other climate-related risks.

Ms. Brainard is a longtime policy maker in Washington. She played a leading role in the European debt crisis and Chinese currency deliberations during the Obama administration as an official in the Treasury Department, and she worked for the National Economic Council during the Clinton administration . She obtained his doctorate in economics at Harvard and was a promising professor at the Massachusetts Institute of Technology before moving to Washington to pursue a career in politics.

Ms Brainard was initially seen as one of the top contenders for the post of Treasury secretary in the Biden administration, although some progressive groups opposed her for the post. However, many of those same people had pushed her to run for Fed president or other leadership position, often based on her background in financial regulation.

As the only Democrat to remain on the Fed’s board in Washington after 2018, Ms Brainard used her position to draw attention to efforts to eliminate banking rules. In the process, she created a rare public disagreement at the consensus-driven central bank, opposing policy changes more than 20 times in 2019 and 2020.

Ms Brainard has often published detailed explanations of her dissent, presenting a roadmap of the changes that have been made and why they might be problematic. For example, when the Fed streamlined its stress testing approach, it supported simplification in spirit – but disagreed with how it was done.

“Today’s rule gives the green light to the big banks to substantially reduce their capital buffers, at a time when payments have already exceeded profits for several years on average,” she argued, publish an analysis how she came to this conclusion, one that Mr. Quarles disagree with.

While her new position doesn’t give her a more direct say in financial regulation than she did before – governors all have a single vote on regulatory decisions – she and her dissent dossier could be a resource. for the new person entering the post of vice president of supervision. job.

Ms. Brainard’s experience in international politics also means that she can provide a holistic view of monetary policy, a fact some commentators have celebrated.