MNI: Fed's Williams - Optimal Supply Of Bank Reserves Varies

Federal Reserve Bank of New York President John Williams said Thursday the optimal supply of bank reserves varies greatly, depending on central bank jurisdiction, uncertainty, the design of liquidity facilities and preferences over the various goals related to monetary policy implementation.

"First, absent a lending facility, the optimal supply of reserves under uncertainty is greater than it would be absent uncertainty," Williams said in prepared remarks at a New York Fed and Columbia University’s School of International and Public Affairs event on monetary policy implementation.  

"Second, the ideal choice for the supply of reserves depends on institutional factors, such as the pricing of and frictions related to liquidity facilities as well as preferences over the various goals related to monetary policy implementation," he said. 

Williams' remarks were directed to an audience that included a number of officials from foreign central banks. "In other words, there is no single best way to supply reserves; rather, the best mix of tools depends on circumstances and policy preferences unique to each jurisdiction," he concluded. He did not comment directly on Fed balance sheet policy.