US central bankers are no longer allowed to invest in individual stocks

To avoid conflicts of interest, the US Federal Reserve is tightening the rules for investing in stock markets for its senior staff. In the future, Fed officials will not be allowed to hold individual stocks, the central bank announced Thursday. In addition, trading should be stopped during periods of unusual stress on the stock markets.

The central bank justified the new measures, which also provide for the prior approval of commercial activities, which should protect against “creating the appearance of a conflict of interest.” “These tough new rules set the standards so high that the public can ensure that all of our senior officials focus solely on the Fed’s overall mandate,” said Fed Chair Jerome Powell.

The head of the US central bank himself came under heavy criticism recently after it became known that he sold shares in an index fund in October 2020, just a few days before a sharp drop in prices occurred on US stock exchanges. Last year, two senior Federal Reserve officials, who are no longer in their positions, benefited from the sale of individual stocks.

Powell announced last month the revision of the existing rules. His term as Fed chair ends next February. US President Joe Biden has not yet commented on Powell’s possible second term. Details of the new rules, such as how to define “extraordinary pressure” in stock markets, must now be worked out, according to the Federal Reserve.