Fed's Barr (voter) says smaller Fed balance sheets would likely increase Fed interventions and that reducing liquidity rules to shrink the Fed balance sheet is not a good idea

Says: Lowering liquidity requirement would simply increase stability risks. If anything, liquidity requirement should go up, not down. Skeptical that liquidity coverage ratio tweak would really affect reserve demand. Smaller balance sheet could drive more money to Fed liquidity facilities. Moving back to scarce reserves would bring lots of trade offs. Fed is working to move balance sheet duration to match broader Treasury market. Creating reserves is costless to Fed. Effective monetary policy implementation is about rate control. Fed monetary policy toolkit has been working well for a long time.