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Monetary policy and treasury market functioning

Author

Listed:
  • William Nelson

    (Bank Policy Institute)

  • Tiffany Wilding

    (New York University)

  • Ellen Zentner

    (City University of New York)

Abstract

The Federal Reserve is currently in the process of reducing the size of its balance sheet. Major questions, especially in light of the surprising impact of its 2019 reductions, are what its ultimate size will be. Many factors will play into that, including the interaction of bank capital and liquidity requirements with the size of reserves and the impact on the ability of the private market to absorb Treasury debt issuance, the willingness of banks to regularly use the discount window and other market participants to borrow at the standing repo facility, as well as the ongoing risk that a large Fed balance sheet can generate large losses to the System.

Suggested Citation

  • William Nelson & Tiffany Wilding & Ellen Zentner, 2024. "Monetary policy and treasury market functioning," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(3), pages 149-153, July.
    • Handle: RePEc:pal:buseco:v:59:y:2024:i:3:d:10.1057_s11369-024-00362-6
    DOI: 10.1057/s11369-024-00362-6
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