The Federal Reserve is evaluating its holdings of bank reserves in light of post-crisis regulations that require firms to keep more liquid assets and banks’ risk-averse preference for them, Vice Chairman Richard Clarida said.
“Ultimately, these factors, along with the choice we make with regard to our operating framework, will be the primary determinants of the size of our balance sheet,” he said yesterday.
Clarida’s comments reflect the Fed’s evolving view that Dodd-Frank Act regulations enacted since the 2008 financial crisis should be factored at times into monetary policy considerations.
Fed’s balance sheet review includes Dodd-Frank impact on banks’ liquid holdings, Vice Chairman Clarida says
13 January 2019 11:08pm