When the a new Fed chairman of the US Federal Reserve assumes office next year, the transition will attract be greeted by great fanfare as well as and widespread market apprehension. After all, the new chairman He or she will succeed not only a very long-serving predecessor but also and one of the most widely known chairmen in Fed Federal Reserve history. More than that, he or she The new chairman will also be forced immediately to confront some knotty domestic and international challenges. bearing down on the monetary system.

Internationally, the new chairman will assume the role as the of de facto head of the world financial system. This is because the US dollar is the world’s key reserve currency. In today’s globalised financial markets – in which US financial markets are highly integrated and often dominant te – adverse events can propagate rapidly, sometimes generating systemic risks. There is no formal international central bank to respond to these gyrations. The International Monetary Fund, the closest thing we have to a global central bank to respond to these gyrations, is the IMF, but it is hampered by its lack of authority and cumbersome bureaucracy. Instead, So when financial crises arise, the US Fed and Treasury try to work in concert with the IMF.must shoulder much of the burden of maintaining global stability.