From American Banker, November 19:
- Key Insight: Federal Reserve Gov. Stephen Miran said certain bank regulations are preventing the Fed from further shrinking its balance sheet.
- Expert Quote: "Trying to settle the ongoing debates on how monetary policy is best implemented before settling the regulatory framework is putting the cart before the horse." — Federal Reserve Gov. Stephen Miran.
- What's at stake: As the central bank moves to streamline its oversight processes, concerns are emerging that reducing proactive supervision could allow risks to build in the banking system.
Federal Reserve Gov. Stephen Miran said further regulatory rollbacks could allow the central bank to continue shrinking its balance sheet in the future.
Speaking Wednesday at a Bank Policy Institute event, Miran stressed that monetary policy and regulation are intertwined and that regulation can ultimately dictate policy outcomes.
He argued that banks hold more reserves than necessary because regulations incentivize them to do so, leaving the Fed with a balance sheet that is larger than it needs to be.
"For all the talk about fiscal dominance of monetary policy, the reality is that the size of the balance sheet is a result of regulatory dominance," Miran said. "Regulations boost demand for reserves, which in turn requires us to end runoff or purchase securities for reserve management purposes."
He added that debating "how monetary policy is best implemented before settling the regulatory framework is putting the cart before the horse."...
....MUCH MORE
Here is Miran's mini-bio and the speech, both via the Federal Reserve Board:
November 19, 2025 - Regulatory Dominance of the Federal Reserve’s Balance Sheet
