Federal Reserve governor Donald Kohn will take over the No. 2 spot at the central bank, the White House announced Thursday.

Kohn, who became a Fed governor in August 2002, was nominated as vice chairman to replace Roger Ferguson, who left the central bank in late April.

The Federal Reserve determines the course of interest rates, which affect investors large and small. It also is responsible for making sure the nation's financial system remains safe and sound.

President Bush has put his imprint on the central bank. He selected Chairman Ben Bernanke, who came to the job on Feb. 1 to replace Alan Greenspan, and Bush has either appointed or reappointed each of the people on the Fed's board.

Bush will get another chance to make his mark on the Fed because Kohn's elevation to the No. 2 spot would still leave one open seat to fill on the seven-member board.

The selection of Kohn, 63, to fill a four-year term as the Fed's vice chairman is subject to Senate approval.

Kohn is considered a veteran of the Federal Reserve System, having begun his career as a financial economist at the Federal Reserve Bank of Kansas City in 1970. Over the years he held a number of Fed posts, eventually rising to a governor in 2002.

Bernanke welcomed the nomination.

"I am very pleased," Bernanke said. "Governor Kohn has made crucial contributions to the work of the Federal Reserve in his more than 30 years of service. He is highly respected by his colleagues for his sound judgment, keen analytical insight and strong leadership," Bernanke said. "I look forward to working with him in this new role upon his confirmation by the Senate."

Kohn graduated from the College of Wooster with a bachelor's degree in economics in 1964. He received his Ph.d in economics in 1971 from the University of Michigan. He has written extensively on issues related to monetary policy and its implementation by the Federal Reserve.