Federal Reserve Speeches·May 8, 2026, 7:30 PM ET

Waller, Update On Federal Reserve Bank Operations

The speaker proposes centralizing & standardizing non-monetary back-office functions to improve efficiency while preserving the Federal Reserve's regional design & independence.
Functions unique to local districts, such as monetary policy voting, research, community outreach, supervision, & discount window operations, should remain under local Reserve Bank control.
Functions where geography does not matter, including IT, human resources, financial management, risk management, & payments, should be standardized across the System to lower costs & improve risk management.
A new framework allows Reserve Banks to make independent decisions collectively rather than individually, with a single Bank acting as a "contractor" for specific services like human resources.
This approach requires a shift in mindset from "Bank first, System second" to "System first, Bank second" & a change in governance to move away from strict consensus models for operational decisions.
Individual Reserve Banks must give up day-to-day decision rights over centralized services but retain overall operational independence & accountability through Board oversight.
The transformation aims to modernize operations, reduce costs, & maintain service excellence for critical activities like moving trillions of dollars in daily payments.