Charles I. Plosser, President and Chief Executive Officer of the Philadelphia Fed recently made a speech at the Cato Institute’s 31st Annual Monetary Conference. He spoke on limiting the Fed and other central banks to help preserve the central bank’s independence. His four step plan is the following:

• First, limit the Fed’s monetary policy goals to a narrow mandate in which price stability is the sole, or at least the primary, objective;
• Second, limit the types of assets that the Fed can hold on its balance sheet to Treasury securities;
• Third, limit the Fed’s discretion in monetary policymaking by requiring a systematic, rule-like approach;
• And fourth, limit the boundaries of its lender-of-last-resort credit extension.

He argues that by limiting the central bank and improving its independence it would make it easier for the public to hold the Fed accountable for its policy decisions.

Click here to read his full speech.