Investing.com -- Federal Reserve Governor Christopher Waller on Tuesday proposed restructuring the operational framework of the Federal Reserve system's 12 regional banks, advocating for centralization of key business functions including human resources, finance, procurement and technology.

Waller presented his vision during remarks at the Brookings Institution in Washington, stating the Fed needs to centralize operations into national lines of business and shift away from individual Reserve Banks managing operational infrastructure with a bank-focused rather than system-wide approach.

The governor outlined two potential models for reorganization. The first involves standardization with centralized system leadership, placing key support functions under a single senior leader. The second model goes further, incorporating physical consolidation across functions that do not require local presence.

Waller emphasized the proposal does not centralize authority in Washington and stressed the Fed's decentralized structure remains essential for carrying out vital responsibilities. He said each bank president having an independent voice at Federal Open Market Committee monetary policy meetings should continue, and he sees no reason to reduce the number of Reserve Banks or alter their geographic boundaries.

The governor noted certain activities, including HR systems, payroll and benefits administration, finance and accounting, procurement and vendor management, and payments, technology and fiscal agency work, do not depend on geography and would benefit from integration, scale and standardization.

Waller said the Fed has reached a point where it needs to capture efficiency and risk-reduction benefits through standardizing and likely centralizing many regional Reserve Bank functions. He added outsourcing certain activities should occur if cost savings warrant it.

The second model could result in lower employment levels at regional banks in the future, Waller acknowledged.

Waller did not comment on the economic outlook or interest rates, as officials are in the blackout period before next week's monetary policy meeting.