The Foreign Affairs of the Federal Reserve
Journal of Corporation Law, Forthcoming
62 Pages Posted: 10 May 2018
Date Written: April 27, 2018
Traditionalists believe that foreign policy is forged by conflict between the legislature and the executive, with the judiciary acting as referee. We reject that paradigm, and make the case that the country’s independent agencies, exemplified by its central bank, have become significant and independent foreign policymakers. The U.S. Federal Reserve System sometimes has imposed a globalist, cosmopolitan approach to international economic relations at loggerheads with the political preferences of the executive and legislative branches; at other times it pursues a form of rank nationalism at the expense of our allies. Our account complicates the paradigmatic story of foreign relations law, and identifies a problem – the independent agency foreign policy role is both necessary and unconstrained. To solve the problems posed by the Fed’s foreign policy, we identify a mechanism that might preserve central bank independence and yet support some of the advantages that accrue from tolerating the Fed as an independent foreign policy-maker. We argue that this solution may also be applicable more generally to the problem of regulatory diplomacy wherever it occurs in the administrative state.
Keywords: foreign relations, administrative law, central banking, Federal Reserve, financial regulation, international law, financial history
JEL Classification: F30, F33, N10, N12, N40
Suggested Citation: Suggested Citation