Analysis: The Federal Reserve's new bond-buying program is essentially still QE, and stablecoins are currently the most urgent issue regarding currency quality

On December 12, former Morgan Stanley NFA trader Jeff Park posted on X, stating that the Federal Reserve's recently announced reserve management-driven purchase plan, although labeled as "reserve management," is essentially still QE, but upgraded from "quantitative easing" to "qualitative easing." Under an ample reserves system, reserves have perfect balance sheet flexibility due to a 0% risk weight under LCR, far superior to short-term Treasury bonds. This also explains why the SLR rules were suddenly relaxed before Thanksgiving and why a $40 billion monthly purchase plan was quickly announced within two weeks before the end of QT. In short, short-term Treasury bonds are "near money," but reserves are "perfect money." In addition, Jeff Park added that stablecoins are currently the most urgent "money quality" issue, which is also why cryptocurrencies can never truly disappear.