which the committee has described as “ no larger than necessary for the efficient and effective implementation of monetary policy. " there are good reasons to expect a normalized balance sheet to be considerably smaller than its current size but larger than its pre - crisis level. most obviously, trend growth in the demand for currency gradually pushes up the size of the balance sheet over time, but there are also other reasons to expect the post - crisis new normal to be larger than pre - crisis levels. the structural demand for reserves may be considerably larger now than prior to the financial crisis because of a number of changes, including new regulations that favor safe liquid assets and changes in financial institutions ’ attitudes toward risk. 8 if the demand curve for reserve balances has shifted out, then a greater supply of reserves will be needed to attain a given interest rate target. moreover, the supply of reserves will need to be set far enough above the structural level of demand to accommodate unexpected shocks to the demand and supply of reserves. to accomplish this, the committee could choose to implement policy by adjusting the supply of reserves to offset such shocks. or, the committee could decide to maintain the current floor system, in which a buffer of reserves, sufficient to accommodate any sizable shocks to reserves demand and supply, is maintained, thereby obviating the need for high - frequency adjustments to the supply of reserves. the committee ’ s normalization principles suggest that any buffer would be the minimum amount needed to efficiently and effectively implement policy. 9 because of changes in structural and short - term factors since the crisis, it is difficult to know with any precision how low reserves can be allowed to drop while still maintaining effective interest rate control. thus, as the balance sheet gradually declines, it will be important to carefully monitor money markets for indications that any further reduction in the supply of reserves will begin to put upward pressure on money market rates. at that point, the amount of reserves will likely be close to the minimum amount necessary to satisfy demand at the target rate. 10 conclusion to conclude, recent developments suggest that the macro economy may be at a transition. with full employment within reach, signs of progress on our inflation mandate, and a favorable shift in the balance of risks at home and abroad, it will likely be appropriate for the committee to 5 / 6 bis central bankers'speeches continue gradually removing monetary accommodation. as the federal funds rate continues to move higher toward its expected longer - run level, a transition in balance sheet policy will also be warranted. these transitions in

randal k quarles : the roles of consumer protection and small business access to credit in financial inclusion speech by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the hope global forums annual meeting, atlanta, georgia, 26 march 2018. * * * good evening. thank you to john bryant and operation hope for inviting me today to open the hope global forums. 1 i commend our hosts for bringing together such an impressive group of speakers and attendees, diverse in their perspectives, yet all of whom share the vital goal of advancing economic opportunity and inclusion. it is fitting that this event is being held on the 50th anniversary of several notable events, including the publication of dr. martin luther king ’ s last book, where do we go from here : chaos or community, which urged unity in order to create equal opportunity, and the enactment of the fair housing act of 1968, which enshrined our nation ’ s commitment to equal access to housing. these milestones remind us of the progress we have made to date as well as the challenges that remain, and inspire us to persist in our efforts. the conference has a robust agenda ahead. over the next few days, you will be discussing many issues relating to financial inclusion — such as housing, small businesses, workforce participation, and other topics — to which we at the federal reserve share a commitment, and that we view as critical to our mission. our economy is stronger when everyone has a chance to contribute fully and share in our national prosperity. and i personally believe that financial inclusion helps us realize a founding notion of our country — that this is a place where opportunity, innovation, and productivity are encouraged and rewarded. i ’ m particularly pleased to see on the conference agenda a number of sessions on issues to which we, at the federal reserve, devote considerable attention : access to credit and financial inclusion for consumers and small businesses. conversations like these are enormously important to understanding the challenges americans face and why a multitude of voices and approaches are needed to address them. in my remarks today, i ’ d like to focus on the consumer protection and credit accessibility aspects of financial inclusion, and some of the ways that the federal reserve promotes a fair and transparent consumer financial services marketplace. in recent speeches, i have emphasized my view that we should aim for an effective safety and soundness regulatory approach that is as efficient, transparent, and simple as feasible. 2 i consider these principles to