U.S. Treasury Secretary Basant set the standards for the next Fed chair, emphasizing the independence that protects the cornerstone of a "strong dollar".

U.S. Treasury Secretary Scott Bessent has publicly expressed his views on the successor to the Fed Chair, emphasizing that the next leader must possess a broader perspective that goes beyond interest rate management and be wary of the threats to the independence of the Fed posed by the expansion of its responsibilities. Bessent elaborated for the first time that the core of the "strong dollar" policy lies in maintaining the status of the reserve currency and revealed insights into the coordination of exchange rates between Japan and the U.S. Currently, the list of potential successors to Powell has expanded to 10 individuals, including former Fed officials and economic advisors from the Bush era, with Trump’s demand for interest rate cuts becoming a key variable. This article details the selection criteria, dollar strategy, and the policy positions of the candidates.

Besant defines the core competencies of the Fed Chair and warns of an independence crisis On August 7th in Washington, Bessent explained to Japan's Nikkei News his qualifications for the next chairman of the Fed: "The candidate must win the trust of the market and have the ability to analyze complex economic data," and emphasized that "the focus should be on future trends rather than over-relying on historical patterns." He warned that the continued expansion of the Fed's responsibilities could threaten its policy independence.

According to Reuters, Besant is leading the selection process for the successor to current chairman Powell (whose term ends in May 2026). When asked about President Trump’s repeated public calls for interest rate cuts, Besant responded that "the president has the right to express his position, but the Fed ultimately maintains independent decision-making."

"Strong Dollar" Strategy Reinterpreted: Anchoring the Status of Reserve Currency Bescent redefines the essence of the U.S. government's "strong dollar" policy, pointing out that its nature is not to pursue a specific exchange rate value, but to maintain the dollar's reserve status relative to other currencies: "The strong dollar policy is to implement policies that can continuously strengthen the dollar's status as a reserve currency. If economic policies are appropriate, the dollar will naturally strengthen."

Bescent revealed that it has held multiple rounds of exchange rate consultations with Japan's Finance Minister Kato Katsunobu:

• The May G7 meeting confirmed that the USD/JPY exchange rate was in line with the fundamentals.
• In June, the Ministry of Finance wrote to Congress, advocating that the Bank of Japan should adhere to a policy tightening path to "normalize" the yen's weakness.

Bessent believes that as long as the Bank of Japan focuses on fundamentals such as inflation and growth, the exchange rate will adjust automatically. Governor Ueda Kazuo and the board are guided by the inflation target rather than a specific exchange rate level. Although Japan's inflation rate has exceeded the 2% target for three consecutive years, Ueda is still cautiously assessing the impact of U.S. tariff policies on the fragile economy, leading the BOJ to remain inactive after raising rates to 0.5% in January, which has become an important factor in the continued weakness of the yen.

Powell's successor list expands to 10 people, with the interest rate cut stance becoming a key selection criterion Currently, there are about 10 potential successors to Powell, with core competitors including:

• James Bullard: Former president of the St. Louis Fed and current dean of Purdue University's business school, predicted in May that there may be a rate cut before September.
• Marc Sumerlin: Former President Bush's economic advisor, recent monetary policy stance not disclosed.
• Kevin Hassett: Director of the National Economic Council
• Kevin Warsh: Former Fed Governor
• Christopher Waller: Current Fed Governor

It is worth noting that Hasset, Waller, and Walsh have all expressed support for interest rate cuts, aligning with Trump's public demands. The President has quickly nominated Stephen Miran to replace the resigned board member Adriana Kugler, with a term ending on January 31, 2026, while also searching for a new nominee for a 14-year term starting February 1.

Conclusion: Key Turning Point in Monetary Policy, Global Markets Facing Liquidity Changes Bessent's tone on the selection of the Fed chair highlights that U.S. monetary policy is at a historic turning point. The next leader's decisions on the interest rate path will directly impact the liquidity distribution in global capital markets and the pricing of risk assets. As the Bank of Japan struggles to balance between inflation and the Exchange Rate, the defense of the dollar's reserve status has extended into the depths of international coordination. If a candidate inclined towards rate cuts ultimately leads the Fed, it may inject new momentum into the crypto market and U.S. stocks in 2025, but the traditional independence of the Fed faces severe tests.