Christina Parajon Skinner

Christina Skinner and Andrew Levin (Forthcoming), Central Bank Undersight.

Abstract: As America’s central bank, the Federal Reserve is unique among independent agencies in exercising powers that the Constitution granted to the legislative branch, namely, regulating the value of money and borrowing funds directly from the public. In delegating these powers, Congress designed the Fed to ensure that its monetary policy decisions would be insulated from political interference. Furthermore, Congress has a constitutional obligation to maintain effective oversight of the Fed’s exercise of these duties. Over the past fifteen years, however, the scope and complexity of monetary policy has outpaced Congress’s ability to monitor these policies through existing mechanisms of oversight. Consequently, this congressional “undersight” is undermining the delicate balance between the Fed’s independence and public accountability. For example, internal shifts in the Fed’s governance and power dynamics have led to the disappearance of dissents on monetary policy decisions, thereby hampering legislators’ ability to discern the range of views that have informed those decisions. Moreover, in conducting its latest round of securities purchases (“QE4”) during 2020-22, the Fed did not provide legislators with cost-benefit analysis or risk assessments at any stage of the program. Indeed, QE4 is now likely to cost taxpayers more than $1 trillion, but its efficacy has still not been scrutinized by any external reviews. To restore effective oversight of the Fed’s monetary policymaking, legislators may wish to consider potential approaches such as strengthened reporting requirements, secured access to sensitive information, and external reviews by congressional watchdogs.

Christina Skinner (2024), Privatizing Deposit Insurance, Harvard Business Law Review , 14 (), pp. 455-498.

Abstract: For the past 90 years, the federal government has provided insurance to bank depositors against the risk of loss associated with a bank’s failure. In many ways, this insurance scheme—managed by the Federal Deposit Insurance Corporation (“FDIC”)—is the bedrock of banking law. FDIC insurance aims to preempt bank runs by ensuring that depositors remain confident in the security of their funds, even when turbulent times hit. In practice, however, FDIC insurance has suffered from one key design flaw—it has never managed to reconcile the tradeoffs between the moral hazard it produces and the financial stability it ensures. In large part, this is due to policymakers’ inability to credibly commit to maintaining the limits on insurance payouts that Congress statutorily sets. Over the past forty years, the cap has consistently been lifted to protect uninsured depositors in each successive banking crisis. This Article argues for a fundamental reset in deposit insurance law by privatizing insurance for deposits above the FDIC cap. Requiring banks to form private insurance schemes has been attempted in the past on the state and local levels, but lessons from those experiences appear to have been forgotten or misconstrued. Private insurance would put more skin in the game in banking supervision and reduce the taxpayer burden associated with bank resolution, while delivering the same (if not more) confidence than federal deposit insurance alone currently does.

Christina Skinner (2024), Capitalism Stakeholdersim, Seattle Law Review , 47 (), pp. 643-676.

Abstract: Today’s corporate governance debates are replete with discussion of how best to operationalize so-called stakeholder capitalism—that is, a version of capitalism that considers the interests of employees, communities, suppliers, and the environment alongside (if not before) a company’s shareholders. So much focus has been dedicated to the question of capitalism’s reform that few have questioned a key underlying premise of stakeholder capitalism: that is, that competitive capitalism does not serve these various constituencies and groups. This Essay presents a different view and argues that capitalism is, in fact, the ultimate form of stakeholderism. As such, the Essay urges that the best way to elevate the welfare of all stakeholders in a society is to maximally free markets, leaving the State with limited responsibilities in the marketplace—namely, to calibrate incentives for pro-social innovation, regulate evident market-failures, and occasionally provide for public goods.

Christina Skinner (2024), Central Bank Digital Currency as New Public Money, University of Pennsylvania Law Review , 172 (), pp. 151-218.

Abstract: Today, nearly every central bank around the world is considering whether to create a new form of digital public money, referred to as central bank digital currency, “CBDC.” Although CBDC is often discussed as a way to make payments more efficient, enhance financial inclusion, or reduce the risk of financial instability posed by stablecoins, the legal rights attached to CBDC remain poorly understood. This Article theorizes American public money as a bundle of distinct economic rights--namely, rights to popular monetary sovereignty; to property in value; and to qualified privacy. It then measures CBDC against the legal and conventional status quo to discern where CBDC adds to the monetary bundle-of-rights or takes a stick away. The Article argues that CBDC transfers significant monetary power to the State by weakening the individual right of issuance, conditioning the individual right to monetary property, and rendering monetary privacy rights scarce. It also, in so doing, empowers the central bank while weakening its independence.

Christina Skinner (2024), Private Equity for the People, University of Pennsylvania Law Review , 171 (), pp. 2059-2095.

Abstract: Today, the law assumes that most households—comprised of so-called retail investors—are insufficiently sophisticated in their financial decisionmaking to invest in private equity funds. The law brackets investors according to their wealth and portfolio size, thereby restricting access to private fund investing to the retail category of investors. For some time now, scholars, policymakers, and asset managers have questioned the modern-day logic of using wealth as a proxy for investment acumen, yet legal reform has been slow to arrive. This Article explains that the rise of crypto investment options, and the speculative investment they attract, further undermines the logic of restricting retail investor access to private equity. Ultimately, the Article argues that in a crypto world—which is also hallmarked with considerable macroeconomic volatility—maintaining these legal barriers to private equity investment restricts economic choice in a way that appears to be constitutionally unsupported. Ultimately, then, the Article urges broadened access to private fund investing and, in turn, an increase in the latitude of investor decisionmaking, autonomy, and choice.

Christina Skinner (2024), The Monetary Executive, George Washington Law Review , 91 (), pp. 164-223.

Abstract: Contemporary presidents possess a significant array of powers to intervene in the economy unilaterally, via executive order or the Treasury Department’s tools. But the Constitution does not vest the Executive Branch with monetary or fiscal power. Rather, the President has accumulated vast monetary power gradually, over time, through successive delegations from Congress. This Article traces the development of a constitutional oxymoron—the “Monetary Executive”—through the lens of statutory delegations. Ultimately, the Article urges that the consequence of this migration of monetary power from Congress to the Executive will be corrosive to our democratic institutions and contribute to inflation—undermining the central bank’s independence, eroding fiscal discipline, and perpetuating policy error.

Christina Skinner (2024), Coins, Cross-Border Payments, and Anti-Money Laundering Law, Harvard Journal on Legislation , 60 (), pp. 301-351.

Abstract: Financial innovation in the cryptocurrency space has prompted central bankers and financial policymakers around the world to question the future of money and payments. For many scholars and policymakers, the rise of cryptocurrencies implies significant improvements to the efficiency of making cross-border payments—and thus portends a gradual sunset on the legacy payments system. But for decades, that legacy payments system has partnered with the State to accomplish valuable foreign policy and national security goals: to combat money laundering, deter state aggression, and defend human rights and democratic institutions. This Article examines the potential for cryptocurrency payments ecosystems to bypass the legal frameworks that today require banks to act as gatekeepers of illicit finance and enforcers of sanctions regimes. Ultimately, in light of the trade-offs implied by moving from a bank-centric to a multi-railed crypto system, this Article argues for infrastructure-building within the existing system. In particular, it proposes the introduction of a centralized verifying party, which would conduct customer due diligence on an industry-wide basis. Given the cur- rent costs and complication of banks’ current legal requirements to undertake individualized due diligence, the structural reform proposed here stands to make the legacy payment system more efficient—and hence more attractive relative to crypto competitors—for making cross-border payments.

Christina Skinner and Rosa Lastra (2024), Sustainable Central Banking, Virginia Journal of International Law , 63 (), pp. 397-446.

Abstract: In the past several years, central banks globally have begun to consider whether, and to what extent, questions of climate change and sustainability intersect with their legislative mandates. The issues are not straightforward nor is there a one-size-fits-all approach. A range of important questions thus remain unanswered. To what extent can central banks pursue climate change and sustainability goals within their statutory authorities and thus retain legal legitimacy around these actions? Where legal authority exists, how can central banks operationalize climate or sustainability goals—are existing tools fit for purpose or are new ones required? What is the best distribution of tasks between political authorities and depoliticized agencies with narrower mandates? Inasmuch as public discourse and debate have thrown up these thorny questions, the next several years will require policy and academic conversation to explore them. To that end, this Article develops a set of principles for central banks to consider when addressing these climate policy governance questions, in particular with regard to the limits and legitimacy of sustainable central banking. It does so by examining the legal frameworks and unfolding climate initiatives in the U.S. Federal Reserve, the U.K. Bank of England, and the European Central Bank.

Christina Skinner and Carola Binder (2024), The Legitimacy of the Federal Reserve, Stanford Journal of Law, Business, and Finance , 78 (), pp. 1-40.

Abstract: In the past several years, the Federal Reserve—America’s central bank—has considered expanding its authority into areas not typically within a central bank’s domain, such as climate change, inequality, and diversity. For some of this time, the Federal Reserve has struggled to control inflation. The Fed’s simultaneous expansion into new areas of social and economic life without congressional approval, and rising price levels, puts the Fed’s legitimacy into question. Damage to the Fed’s legitimacy could invite legal reform: by congressional efforts to revisit its legal mandates or a Supreme Court in search of evidence to rein in the administrative state. Yet to date, the conditions of the Fed’s legitimacy remain relatively understudied, obfuscating the best way forward for the Fed to maintain its credibility. This Article combines law and macroeconomics methodologies to derive the legal and democratic aspects of the Fed’s legitimacy in contemporary times. Our survey of 1603 American citizens in 2021 and 2022 reveals that the general public prefers the Fed to focus on inflation and interpret its mandates more narrowly. In view of these results, the Article urges the Fed to use restraint when exercising the discretion in the interstices of its legal mandates.

Christina Skinner and Carola Binder (2024), Laboratories of Central Banking, Review of Banking and Financial Law , 42 (), pp. 235-299.

Abstract: Since its founding in 1913, the central bank of the United States has enjoyed a reputation as an erudite institution. Rigorous, well-resourced, and expansive research has become a hallmark of the Federal Reserve System. Indeed, research is itself a core function of the Fed: it both underpins Fed policy and serves as the vehicle through which the Fed communicates its purpose and aims to the public. Spread across twelve regional Reserve Banks, the research function is also uniquely experimental in its nature. Yet to date, little scholarly attention has been paid to the research function of the Federal Reserve. Consequently, important questions remain unanswered: what are the legal and policy implications of research experimentation at the Reserve Banks, which are in fact private institutions albeit serving public aims? Drawing together primary source documents and a novel data set of nearly 5,000 hand- collected research documents from the twelve Federal Reserve Banks, this Article tells the untold story of the research function of the Federal Reserve—from 1913 through the present day. The historical and empirical narrative demonstrates how the research function dedicated the System to public transparency, and enabled intellectual exploration and experimentation that led to sounder policy. But it also underscores the delicate balance between experimentation among the Regional Reserve Banks and the need for accountability to the Board. In recent years, as the research function has grown in scope and drifted away from the Board’s purview, there exists potential for politicization of the System overall in the pursuit of new agendas.