US president George W Bush has nominated Federal Reserve governor Donald Kohn as vice-chairman to Ben Bernanke, replacing Roger Ferguson, who resigned at the end of April.

Mr Kohn (63) has spent his entire career at the Fed, beginning with a post as financial economist at the Kansas Fed in 1970, and is less than four years into a full 14-year term as a Fed governor. The vice-chairmanship lasts four years.

The respected veteran is known to have been close to Mr Greenspan, helping to emphasise the Fed's links with its recent past at a time when markets are experiencing difficulty in adjusting to Mr Bernanke.

While Mr Bernanke is a monetary policy specialist, Mr Kohn is seen as having a strong understanding of financial markets and of the inner workings of the Fed itself.

The post has no defined duties, other than deputising for the chairman as leader - an event that is extremely rare - but holders often develop specialities.

Mr Ferguson, for example, has been closely involved with bank regulation. In terms of monetary policy leanings, Fed watchers generally characterise Mr Kohn as a moderate.

"He was moderately hawkish in late 1980s and early 1990s, but he has transformed thanks to productivity gains," said Kim Rupert at Action Economics, who said that, like Mr Greenspan, Mr Kohn was opposed to inflation targeting.

Mr Kohn had been seen as among the top candidates for the Fed chairmanship before Bush announced his choice of Mr Bernanke in October.

Mr Bernanke said he was "very pleased" at Mr Kohn's nomination. "Governor Kohn has made crucial contributions to the work of the Federal Reserve in his more than 30 years of service," the Fed chairman said in a statement.

The choice requires senate confirmation.