Fed Governor: Easing Regulations Could Shrink Balance Sheet
Update: 2025-11-19
Description
Federal Reserve Governor Stephen Miran suggests easing regulations on financial firms could enable the central bank to shrink its balance sheet in the future. He believes that with reduced regulatory burden, the ideal level of reserves might decrease, especially when compared to the economy or banking system size. Miran supports the Feds decision to stop balance sheet reduction, emphasizing the need for appropriate regulations and flexible bank balance sheets before further reductions. He also backs ending the quantitative tightening program due to increasing pressure in money markets. Mirans deregulatory push could change how banks manage liquidity, affecting overall reserve levels. Smaller Fed holdings would allow for reduced interest payments on reserves, potentially limiting perceptions of favoritism.
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