Fmr. U.S. Trade Representative Jeff Moon breaks down key takeaways from President Trump's China trip

Thank you for the opportunity to speak to you today. There has been a lot of discussion of late about reducing the size of the balance sheet of the Federal Reserve to reduce our "footprint" in the financial system. I think it is important to frame the discussion, first by being clear about the nature of the problem to be solved and then weighing the tradeoffs of any remedies. I think shrinking the balance sheet is the wrong objective, and many of the proposals to meet this objective would undermine bank resilience, impede money market functioning, and, ultimately, threaten financial stability. Some would actually increase the Fed's footprint in financial markets. That's because the Fed's footprint in the financial system consists not only of the duration, composition, and size of our balance sheet (which are distinct issues), but also our roles in promoting the safety and soundness of banks, running the backbone of the payment system, and supporting financial stability. It doesn't make sense to talk about "the Fed's footprint" without taking into account these key functions and the way they interact. Some of the prominent proposals to reduce the Fed's balance sheet would have perverse effects that would actually increase the Fed's footprint in the financial system. For example, some proposals would increase the frequency of Fed lending and transactions in markets, both to implement monetary policy on an ongoing basis and, in extremis, to engage in interventions to preserve financial stability. FED GOV BARR/NYU MARKETEERS: ALL PROPOSALS TO CHANGE BALANCE SHEET POLICY INVOLVE ''SIGNIFICANT TRADEOFFS;' SHRINKING IT 'THE WRONG GOAL' #Barr #FederalReserve #economy FED GOV BARR/NYU MARKETEERS: REDUCING RESILIENCE OF BANKING SYSTEM 'THE WRONG MEANS' TO CHANGE BALANCE SHEET POLICY #Barr #FederalReserve #economy