Last week, U.S. Treasury Secretary Scott Bessent gave a rather striking interview on CNBC. He floated the idea that it might be time to examine just how well the Federal Reserve is doing its job. Given how vocal Donald Trump has been in criticizing Fed policy, the suggestion is bound to ruffle feathers.
Under the current political climate, I’d say it’s a bad moment to launch such a review—it risks being driven by emotion rather than reason. But in principle, I support Bessent’s proposal. Central banks are tasked with safeguarding price stability, ensuring maximum employment, and maintaining financial stability. Why shouldn’t we periodically assess whether they’re meeting those goals?
Over the past 15 years, each of those objectives has come under serious strain. We’ve witnessed the worst financial instability in nearly a century, unemployment in the U.S. spiked to nearly 15 percent in 2020, and in 2022, inflation came roaring back with a vengeance. The conclusion seems unavoidable: central banks haven’t always delivered.
The real question for any evaluation isn’t whether they failed to meet their goals—it’s whether they could have reasonably done better, and what lessons they’ve learned for the future.
A full evaluation would take far more space than this column allows. So let me focus instead on something I know well: the culture inside central banks, as observed over decades in my dealings with them while at ABN Amro.
First off, central banks have a knack for hiring sharp minds. I can’t recall ever meeting someone from a central bank who struck me as anything less than intellectually impressive. They think in highly structured ways. That’s the good news.
An insider’s club
But here’s where I get uneasy. Central bank culture tends to be insular. They are quick to praise one another, slow to welcome outside views. As an outsider, you can’t shake the feeling you’re dealing with a tight-knit club. External experts are often met with skepticism, sometimes even condescension. I should say, in fairness, that my dealings with staff at the Dutch central bank (DNB) were always respectful and constructive.
After the global financial crisis, one of the big takeaways in evaluating bank failures was that boards had become echo chambers. Dissent was scarce. Bank leaders surrounded themselves with yes-men. So reforms urged boardrooms to seek out—if necessary, even manufacture—opposing views. It begs the question: are central banks taking their own medicine?
One piece of advice I’ve always given colleagues is to avoid only reading things they agree with. You learn far more from challenging perspectives—even if, let’s be honest, listening to views you fundamentally reject can be tough. I have strong opinions, for example, about sustainable investing by pension funds. Others, like Dirk Schoenmaker and Hans Stegeman, see things very differently. And I’ll admit it: sometimes I just can’t get through their pieces. I imagine the feeling might be mutual.
Not exactly rolling out the welcome mat
Sustainable investing is a major issue in the pension world. I’m known in that community, and it’s no secret that I’m a critic. You’d think that might earn me a seat at the table now and then. But that’s rarely been the case.
Well—once it was. Years ago, I was invited to share my perspective with board members at one of ING’s pension funds. But that was it. Earlier this year, I even tried to get myself invited to an ABN Amro pension board meeting to explain my views. I’m a participant in the fund, and—pardon the immodesty—I do know a thing or two about this topic. But I wasn’t welcome. I was offered a meeting with the asset management team instead, which I accepted, but it’s not the same.
Still waiting for a culture of critique
Back to where we started. There’s nothing wrong with evaluating how our central banks are performing. In fact, it’s probably overdue. Of course, that kind of process mustn’t devolve into a political witch hunt. But the broader point remains: the insight we gained after the financial crisis—that large financial institutions desperately need internal dissent—still holds.
Unfortunately, from what I’ve seen, that lesson is proving far too difficult for many institutions to embrace.
Han de Jong is the former chief economist at ABN Amro. He writes a weekly column for Investment Officer on economics and markets. His views can also be found at Crystal Clear Economics.