Warsh’s Balance-Sheet Panel Runs Into Market Reality Check

A panel of top academics and ex-policymakers led by Chairman Kevin Warsh is tackling the complex task of scaling down the Federal Reserve’s massive $6.7 trillion balance sheet. Their challenge is to reduce these holdings in a way that doesn’t send shockwaves through funding markets, a mission that’s proving more complicated than anticipated. This debate is crucial as it impacts the stability of financial markets and the broader economy, making the panel’s work highly significant for future monetary policy.