Ever since the US Federal Reserve began reducing its securities holdings in October 2017, market participants have been debating the ‘right size’ for the Fed’s balance sheet, which currently stands at $4.4 trillion.
The answer hinges on the banking system’s demand for central bank deposits, or excess reserves. Recent speeches and studies from the Fed converge on a $500 billion – or higher – terminal number for reserves, down from $2.1 trillion in February.
Some argue the figure could be much h
The week on Risk.net, September 8-14, 2018Receive this by email