Miran Prefers More Judicious Use of Fed's Balance Sheet

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00:00I'm fully bought into the idea that the balance sheet is a tool to use for traditional monetary

00:06policy purposes of achieving the dual mandate assigned to us by the Congress, but only when

00:11you really need it. And I think part of the problem is that maybe it had been overused

00:16in the past, which led to the buying at prices that sort of ultimately proved to give rise to

00:23those losses. So I'm not in favor of taking away those abilities, but I also am in favor of using

00:28them more judiciously than perhaps they've been used in the past. I don't think that in the current

00:34monetary policy implementation framework, in the current bank regulatory system that we have,

00:40where we sort of force banks to hold reserves, that you really can take away interest on reserve

00:45balances. I think that if you want to think about reducing the outlays and interest on reserve

00:49balances, which is absolutely something worth thinking about and discussing, it's sort of

00:55downstream of the issue of the bank regulatory framework. And we first have to think about

01:01how we're going to improve the bank regulatory framework in a way that would enable the balance

01:06sheet of the institution to be smaller, and thereby allow you to have smaller IORB remittances.

01:15Thinking about tackling IORB before you tackle the regulatory system is very much putting the

01:23cart in front of the horse.

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