Authors: Jeanna Smialek and Madeleine Ngo

President Biden said on Monday that he will nominate Lael Brainard as the Fed’s vice chairman, as the Fed’s No. 2 role, and can give her more powerful powers to influence everything from the cost of capital to the future of digital cash. Of all aspects.

Ms. Brainard, who has served as a governor of the Federal Reserve since 2014, is already a member of the Fed Chairman Jerome H. Powell's internal policy circle. But if she is confirmed by the Senate, her promotion to vice chairman will make her the closest collaborator of Mr. Powell on monetary policy issues.

The vice chair has little official power, but in practice it is often someone who puts forward new ideas in speeches and helps guide the Fed chairman’s thinking on policy issues.

Ms. Brainard’s promotion comes at a critical economic moment. With inflation soaring but millions of jobs are still missing, the Fed is working hard to formulate policies. Like Mr. Powell, Ms. Brainard has been cautious about reacting too quickly to high prices by raising interest rates to curb growth, worrying that this might reduce job market opportunities. But both are carefully observing the price trajectory, focusing on ensuring that high inflation does not become a long-term trend.

"I am committed to making working Americans the center of my work at the Fed," Ms. Brainard said at a press conference at the White House on Monday, where Mr. Biden introduced his options. "This means reducing inflation when people are focused on their jobs and how far their salaries can go."

Ms. Brainard also promised to ensure that the economy is “sustainable for future generations” and that the Fed will reflect “the diversity of the communities we serve.”

Her views on financial regulation and climate change have won the applause of some progressives, but it has also raised concerns among Republicans and raised questions about how much support she might win in the Senate. Senator Patrick J. Toumi of Pennsylvania, the top Republican on the Banking, Housing and Urban Affairs Committee, expressed his appreciation for Mr. Powell's re-election, but expressed his support for Ms. Brainard.

"Although I am concerned about the regulatory policies that Governor Brainard will support as vice chairman, I look forward to meeting with her to discuss these and other issues," Mr. Toumi said in a statement on Monday.

Another Republican on the committee, North Dakota Senator Kevin Kramer also said that he is concerned about Ms. Brainard’s regulatory policies and looks forward to discussing these issues with her.

Ms. Brainard has been a major supporter of the Fed’s more active role in ensuring that the financial system is prepared for the potential impact of climate change. She delivered a speech at the Fed’s first climate-focused meeting in 2019, and recently focused on banks’ needs for climate scenario analysis, which will test their performance in extreme weather events, sea level changes, and other climate-related conditions. Affordability. risk.

As the only Democrat to leave the Federal Reserve Board in Washington after 2018, Ms. Brainard used her position to draw attention to efforts to establish banking rules, a process by the Federal Reserve’s Vice Chairman Randall K. Quall Promoted by Randal K. Quarles, he will step down in December. In the process, she caused rare public disagreements in the consensus-oriented central bank, and raised objections to policy changes more than 20 times in 2019 and 2020.

Ms. Brainard often publishes detailed explanations of her objections, and a road map that outlines what changes have been made and why problems may arise. For example, when the Federal Reserve simplified its stress testing methods, she mentally supported simplification—but disagreed with the simplification approach.

"Today's regulations give the green light for large banks to drastically reduce their capital buffers, when the average spending at this time has exceeded their earnings for several years," she said, and published an analysis of how she came to this conclusion. Quarles disagreed.

Her new position will not give her a more direct say in financial regulation than before—the governor has a vote on regulatory decisions—but she and her record of dissent may become a resource job for newcomers to serve as the vice chairman of supervision.

Ohio Democratic Senator and chair of the Banking, Housing and Urban Affairs Committee, Sherrod Brown, said Ms. Brainard "has been fighting for a stronger and fairer economy all her life."

"At this moment, when workers finally start to see more power in our economy, we need a vice chairman who understands that our economic recovery must strengthen our communities and put workers first," Mr. Brown said. Said in a statement.

Ms. Brainard will become the third woman in the Fed’s 108-year history to hold this position, following Janet L. Yellen and Alice Rivlin. As the Fed considers whether it needs to issue digital currency, her new role will put her in a good position to play an important role in the future of digital currency, which some other global central banks have already or are doing. Her higher position may also give her a more say in climate-related issues.

Ms. Brainard is a long-term policy maker in Washington. She played a leading role in the European debt crisis and China's currency review as a Treasury official during the Obama administration, and worked for the National Economic Council during the Clinton administration. She received a PhD in economics from Harvard University and was an up-and-coming professor at the Massachusetts Institute of Technology before moving to Washington to pursue a career in policy.

Ms. Brainard was initially seen as the main candidate for the Biden government's finance minister. If Ms. Yellen, who now holds the highest policy position, steps down, her name will continue to surface as a potential successor.