Fed's market footprint not a major concern
The guest countered the argument that the Fed's large balance sheet and diminished interbank market are problematic, stating banks have many ways to adjust liquidity and the Fed's market-price influence is shrinking.
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The guest argued that maintaining an 'ample reserves' regime with a large balance sheet creates political economy costs and invites other government entities to use the Fed's balance sheet for politicized purposes, threatening its independence.
The guest countered the argument that the Fed's large balance sheet and diminished interbank market are problematic, stating banks have many ways to adjust liquidity and the Fed's market-price influence is shrinking.