From @financialjuice|2 hr 12 min ago
post: Fed’s Logan: Should keep money market rates near interest on reserves post: Fed’s Logan: Mixed duration and neutral Fed portfolio would be efficient post: Fed’s Logan: The Fed should buy more shorter-dated assets in medium term. post: Fed’s Logan: The central bank balance sheet should be efficient and effective.Logan: Efficient and effective central bank balance sheets Thank you, Vicky [Saporta], for the kind introduction. And thank you to the Bank of England for inviting me to participate in this important conference. The experience of the past two decades profoundly changed how central banks think about both sides of our balance sheets. On the asset side, central banks learned to use asset purchases to provide economic stimulus at the effective lower bound on short-term interest rates, as well as to support smooth market functioning when stresses threatened financial stability. On the opposite side of the ledger, asset purchases drove large increases in central bank liabilities, specifically bank reserves, making liquidity abundant or ample rather than scarce in most financial systems. Experience has shown that ample liquidity provides ample benefits for financial stability, payments and monetary policy implementation. Central banks are now pursuing strategies to maintain those benefits even as the runoff of pandemic-era assets reduces the size of their balance sheets. At times, the diversity of names and tools for these strategies can make it seem as if central banks disagree on the fundamentals of how to proceed. People talk about demand-driven and supply-driven floors, ample and abundant reserves, zero corridors and wider corridors and more. But underneath this
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