MAR 23, 2026Mercatus Center at George Mason University
Bill Nelson on the Future of the Fed's Balance Sheet
- •
The QE Ratchet Effect - Nelson explains how the Federal Reserve's balance sheet tends to expand during crises but fails to return to previous levels due to shifting institutional and regulatory dependencies.
- •
Strategies for Normalization - The discussion details specific mechanisms the Fed can use to shrink its footprint and move back toward a leaner, market-based operational framework.
- •
Bank Liquidity Preferences - Insights from the BPI Bank Treasurers Survey reveal how regulatory requirements and internal risk metrics drive the ongoing high demand for central bank reserves.