Authorities approved the new restrictive rules on Friday as an alternative to reinforce public trust and make officials adhere to ethical guidelines. The FED would adopt new restrictions regarding the investments made by its officials.
As reported by CNBC and Fortune, the central bank of the North American nation has revealed new policies that will prohibit its employees from carrying out transactions with a series of assets, including bonds, stocks, and cryptocurrencies.
The Federal Open Market Committee (FOMC) gave green light to the new policies this week. The regulations, which got initially revealed in October of last year, will come into force on May 1. The new restrictions come according to the recent controversy surrounding the officials’ dubious investment practices.
The policies got created to reinforce public confidence regarding the impartiality of the Committee’s work by avoiding any conflict of interest, this statement got said by the Fed this Friday.
According to reports, Fed officials will not be able to purchase Bitcoin; the ban will get extended to top policymakers, such as those on the FOMC, along with the senior staff.
These policies will also be available for various representatives, like the regional bank presidents and a host of other officials, including staff officers, bond desk managers, and Fed employees who work with board meetings on a regular basis.
The new rules would replace already existing regulations that, while somewhat having a restrictive structure, are still allowing officials such as regional presidents to acquire and sell shares. Likewise, the initial restrictions raised in the October document got expanded to add digital assets such as Bitcoin.
According to the report from that outlet, the new policies also require officials to issue a 45-day notice for transactions. They must receive approval before any purchase and sale. These rules also prohibit trading during moments of stress for the financial environment.
Authorities added in statements to reporters that any disruption will get reviewed on a case-by-case basis. However, they did not bring further details on the possible sanctions that could get implemented to employees who do not violate the measures.
Measures Seek to Guarantee Ethical Practices
Officials who still hold positions in the market will have 12 months to get rid of these prohibited positions. For their part, the new FED officials will have at least six months to do so.
The approval of the stricter measures comes after three senior Fed officials got involved in unusual trading activity that raised questions about ethical compliance when the central bank interferes with economic policies to deal with the situation during the COVID-19 pandemic.
The Fortune media recalls that disclosures presented that the bank’s vice president, Richard Clarida, sold at least USD 1 million of shares in February 2020 before purchasing a similar amount of the same funds.
This event happened a few days later on the eve of a prominent announcement of the FED on measures to cushion the economic crisis. Clarida resigned in January of this year.
By: Jenson Nuñez
