Federal Reserve Balance Sheet Reduction: Brookings Research Outlines Possible Path Forward

AI Briefing

• – Key measures to reduce Fed balance sheet include: Implementing new regulatory requirements for non-bank lenders, Overhauling payment systems to reduce liquidity provision, and Implementing more targeted market interventions.
• – Brookings researchers argue that these measures can achieve balance sheet reduction without compromising financial stability.
• – The research suggests that the Fed can reduce its balance sheet balance by $1-2 trillion over the next few years through these measures.