00:00The benefits of reducing the size of the Fed's balance sheet are clear and, in my view, achievable.
00:04The Fed's balance sheet can shrink, but policymakers should first take steps to make sure they are successful.
00:10I've laid out some of these possible steps today and offer further details in the user's guide.
00:14Each of those steps is likely to have some costs and benefits and will have to be duly studied and
00:19calibrated.
00:20Implementing these steps before beginning to reduce the balance sheet means that it will be some time before we can
00:26begin, if we decide to go ahead.
00:30Based on my experience with how government navigates the Administrative Procedure Act, this process is likely to take well over
00:36a year once the decision is taken to proceed.
00:39It could take several years.
00:41That timeline would dictate when the Federal Open Market Committee decides to begin reducing the balance sheet and studying how
00:46to implement these changes, including giving markets guidance on how new mechanisms will function.
00:51And once the process begins, I would counsel a slow pace of reductions to ensure the private sector can absorb
00:57all the security shed off of our own balance sheet.
01:00I'm excited that all of this can happen, but if or when it does, I expect it to proceed slowly.
01:06I'm excited to see you next time.
01:06I'm excited to see you next time.
01:06I'm excited to see you next time.
Comments