Judy Shelton joins Treasury as adviser to Scott Bessent

Treasury Secretary Scott Bessent has hired Judy Shelton as a counselor, giving the former Federal Reserve nominee a role advising on currency policy and financial conditions in China. For investors, the Judy Shelton Treasury advisor appointment is a personnel decision, and Treasury did not announce a change in currency policy alongside it.

The Treasury Department said Shelton’s work will focus particularly on assessing financial conditions in China. Politico reported that the counselor position is within Bessent’s office and does not require Senate confirmation.

The appointment places Shelton in the Trump administration after her earlier bid for a seat on the Federal Reserve Board failed in the Senate. Reuters reported that bipartisan concerns about whether her perceived partisanship could threaten the Fed’s independence contributed to the opposition.

What will Judy Shelton do at Treasury?

According to Treasury, Shelton will advise Bessent on currency policy, with special attention to China’s financial conditions. The department did not detail specific policy recommendations she will make or announce any new measures.

That Treasury assignment differs from the Federal Reserve Board post for which Shelton was previously nominated. The Federal Reserve describes its Board of Governors as the central bank’s governing body. Shelton’s new Treasury position is an advisory job, not a Fed Board appointment.

Why did Judy Shelton’s Fed nomination fail?

The Senate blocked Shelton’s nomination in 2020 amid bipartisan opposition, according to Politico. Coverage at the time highlighted debate over her views on Federal Reserve independence and her support for a gold standard.

A gold standard ties a currency’s value to gold. Shelton has been a longtime advocate for linking the dollar to gold, Politico reported, although she has said such a change could not happen in the near term. The U.S. fully abandoned the gold standard in 1971, according to Politico.

Politico reported that supporters of a gold standard argue it could make the dollar more stable. Most economists, however, say such a system would restrict the Fed’s ability to use extraordinary measures during a financial crisis, the outlet said.

Shelton’s background

Before this appointment, Shelton served as U.S. director of the European Bank for Reconstruction and Development and chaired the National Endowment for Democracy, according to Reuters and Politico. She also worked at the Independent Institute and Stanford University’s Hoover Institution.

Bessent has played a leading role in the administration’s economic relationship with China, including on trade and competition in artificial intelligence, Politico reported. Treasury’s statement defines Shelton’s remit around currency policy and China-focused financial conditions, but it does not establish what positions she will advocate or what effect, if any, her advice will have on policy.

This story draws on original reporting from CNBC.