Fed Advisor: Powell May Need Five Years to Trim Fed's Balance Sheet

BlockBeats News, March 26th, Federal Reserve Chair nominee Kevin Warsh hopes to significantly reduce the Fed's $6.6 trillion balance sheet. A top financial economist said he may need more than one term to accomplish this task.

Stanford Graduate School of Business professor and longtime Fed advisor Darrell Duffie pointed out in a new paper that if the Fed wants to substantially reduce its footprint in financial markets without causing undue stress, reforms are needed, including a thorough overhaul of bank liquidity requirements and a redesign of the payment system. Once Warsh secures confirmation from the U.S. Senate, as long as he has support from his colleagues, he can immediately implement some reforms.

Duffie noted that other reforms may take up to five years, meaning the work will extend beyond Warsh's four-year term as chair. (FXStreet)