Federal Reserve New York official: Interest rate control toolkit can address the decline in bank reserve demand

The Federal Reserve's toolkit for controlling interest rates is functioning extremely well. The Federal Reserve's liquidity management has always been effective. The scale of Treasury purchases by the Federal Reserve for future reserve management purposes will be determined by market conditions. The Federal Reserve's toolkit is fully capable of addressing changes in bank reserve regulatory rules. Transitioning to a "Scarce reserve system" will present challenges.