World Bank president says he opposes giving more authority to Federal Reserve

WASHINGTON (AP) — The president of the World Bank said Monday he opposes giving more authority to the U.S. Federal Reserve, arguing instead that the Treasury Department is better equipped to manage financial crises.

Robert Zoellick also suggested in a speech that the dollar’s role as a the world’s reserve currency may be diminishing and the United States should recognize this fact.

Zoellick, a former high-ranking U.S. government official and investment banker, said, “it will be difficult to vest the independent and powerful technocrats at the Federal Reserve with more authority.”

He said the lesson he drew from the global financial meltdown and ensuing credit crunch “is that the Treasury Department needed greater authority to pull together a bevy of different regulators.”

In addition, he said, Treasury as a part of the executive branch of government would be subject to greater oversight by Congress and the American public if given additional authority.

The World Bank released excerpts of Zoellick’s speech to Johns Hopkins University’s School for Advanced International Studies in advance of the bank’s annual meeting next week in Istanbul.

Zoellick, in theory an international civil servant who is supposed to remain neutral on domestic policies of the bank’s 185 member governments, was placing himself in the midst of a debate in the Obama administration and Congress over the Federal Reserve’s future.

Since its creation almost a century ago the Federal Reserve has grown into a main power broker and guardian of the U.S. financial system. It plays various roles on the government’s behalf in protecting the economy, including the supervision of banks. But its primary mission is to function as the U.S. central bank.

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