Federal Reserve Governor Milan: Supports Natural Balance Sheet Reduction

Odaily Planet Daily reports that Federal Reserve Governor Milan, in a keynote speech on "Bank Supervision and the Federal Reserve Balance Sheet," stated that he strongly supports simplifying bank supervision and believes the Fed should consider exempting Treasury bonds and central bank reserves from the calculation of bank leverage ratios. Milan stated that he supports a natural balance sheet runoff, but had hoped the Fed would immediately halt quantitative tightening (QT) at the October 28-29 FOMC meeting. Milan pointed out that a smaller Fed balance sheet would reduce interest payments to banks, and the size of the balance sheet should depend on a "gradual stripping" of regulatory requirements. (Jinshi)