Rule Changes May Only Lead to Modest Contraction in Fed Balance Sheet
Regulatory changes aimed at reducing bank reserve requirements could allow for a modest reduction in the Federal Reserve's $6.7 trillion balance sheet, but may not meet new Chairman Kevin Warsh’s desired level of contraction. BNP Paribas estimates that such reforms might reduce reserves by around $700 billion from their current $3.1 trillion.
Topics: Fed balance sheet monetary policy reserve requirements