Central banks in other countries manage with far fewer employees
A new chairman of the Federal Reserve is an opportunity to scale back the system’s staff, whose numbers have swollen in recent years and now far exceed that of similar institutions in other countries.
The Bank of Japan says it has 4,601 employees. The European Central Bank says it has “more than 5,000” employees. The Bank of England announced layoffs in March 2026 from a base of 5,700. Germany’s Bundesbank reports a core staff of 10,333. The Reserve Bank of India has a staff of 13,520, according to the Economic Times, a business newspaper that focuses on India. The U.S. Federal Reserve System, by comparison, reports the equivalent of 24,179 full-time employees in its annual report for 2024, which is the most recent report available on the Fed website.
President Trump and the Treasury secretary, Scott Bessent, have been speaking about the issue. Bessent has suggested the public doesn’t fully realize the central bank’s scale. “You never think there’s a sprawling organization out there,” the Treasury secretary said last month in remarks previewing steps the new Fed chair, Kevin Warsh, might take. “I think he’s going to do a serious look at how did the reserve banks interact, because I think the reserve banks, it’s a management disaster, because something like 50% of the people in each reserve bank do not report to the president of that reserve bank,” Bessent said in a conversation with Semafor editor in chief Ben Smith.
Elon Musk, who worked with Trump to reduce the size of the federal workforce early in Trump’s second term, has called the Fed “absurdly overstaffed.”
Trump is scheduled to swear in Warsh as Fed chair on Friday.
The outgoing chair, Jerome “Too Late” Powell, had first insisted that the Fed was “overworked maybe, not overstaffed,” then internally announced a ten percent reduction in headcount over a period stretching into 2027, including voluntary early retirements. That, in turn, triggered resistance from Sen. Elizabeth Warren of Massachusetts, the top Democrat on the Senate Committee on Banking, Housing, and Urban Affairs. “Taking more cops off of the Wall Street beat only exacerbates this toxic mix of deregulatory actions that turn the clock back to the early 2000s,” the senator wrote, implicitly likening private-sector bankers to criminals. Political donations from the Fed staff have a sharp partisan tilt toward Democrats. In the 2024 campaign cycle, 90.3 percent of contributions from Fed employees went to Democrats, according to OpenSecrets, so the people whose jobs are at risk are the donor and voter base of Warren and her partisan colleagues. Bessent has mocked the institution as providing a universal guaranteed minimum basic income program for academic economists.
It’d be one thing if all these employees were producing stellar results. Yet the results have been disappointing. Bessent said May 3: “If we think about the Powell Fed, if we think about monetary policy, ethics and supervision, they weren’t great. Monetary policy, we had the worst inflation in 48 years. Ethics, we had five governors or regional bank presidents have to resign for ethical problems. And then we had three of the four largest bank failures in U.S. history.” On top of that is the $2.5 billion renovation of the Fed’s Washington headquarters building, which Powell has defended but Trump has described as a scandal.
The U.S. is geographically larger than Japan, the U.K., and Germany; our central bank includes 12 regional banks, each with their own headquarters and executive. The smallest of these, Philadelphia, reported 877 employees; the largest, New York, had 2,997. Early on, the idea was that the regional banks might conduct their own independent monetary policies, with interest rates varying depending on the regional economic conditions. And the regional banks used to feature some methodological diversity, with the St. Louis Fed a bastion of Milton Friedman’s monetarism and the Minneapolis Fed championing rational expectations theory. That sort of diversity has faded, replaced by conformity as Washington has tightened its grip on the regional banks. There have been more dissents lately on interest rate policy, but not many unconventional or heterodox substantive economic voices such as, say, Rick Reider or Ed Yardeni around the Fed. So in some ways, reducing headcount may be an easier job for Warsh than restoring the quality and range of the research work.