Central banking and institutional change in the United States: punctuated equilibrium in the development of money, finance and banking

The experience of institutional change at central banks in the United States has been unique and influential. In this chapter, financial historian Conti-Brown traces the singular experience of central banking in the US from the Banks of the United States through the 2008 financial crisis. Particular attention is paid to the rise and fall and rise and fall of the Banks of the United States; the creation of the Federal Reserve System; the changes to the Fed during the Roosevelt Administration and especially under the leadership of Marriner Eccles; the Fed-Treasury Accord of 1951, seen by some as creating the modern independent Federal Reserve, but in fact much more of a tentative understanding at the time. The chapter also analyzes various dynamics between US Presidents and Fed Chairs, perhaps the most important relationship in determining what kind of central bank the US will have. It concludes with a reflection on how the 2008 crisis has changed the Fed and its political relationships.