How the Covid Crisis Calls for a Makeover at the Fed and ECB

In his first year in office U.S. President-elect Joe Biden has an opportunity to remake the leadership of the Federal Reserve: the current terms of Chairman Jerome Powell and both his two vice chairs expire by 2022. But what the Fed and other central banks need most in a post-Covid world is not new leadership, but a fresh understanding of what they were put on this Earth to do.

Mohamed El-Erian, chief economic adviser at Allianz SE, famously dubbed central banks “the only game in town.” They emerged out of the 2008-09 global financial crisis as seemingly the world’s only effective bulwark against economic disaster. We can see how the world has come to rely on central banks by the recent discussion of their potential role in combating climate change. If you want to get something done these days, you ask a central bank.