is the present and expected future stock of assets the central bank holds, or is anticipated to hold. the “ flow view ” suggests instead that the effect on asset prices relates to the pace at which assets are being added or removed from the balance sheet at that time. many speeches have been given, and journal articles published, about the relative importance of these effects with respect to their impact on financial conditions and the broader economy, a topic that i do not intend to wade into today. 16 instead, i think it ’ s important to make a few points on “ flow effects ” relevant to policy implementation, and in particular related to possible “ flow effects ” associated with an overly rapid pace. overly fast flows of securities into private hands can be disruptive to market functioning. in particular, there is evidence that the agency mbs market, due to the nature of its trading conventions, is prone to dislocation when market participants expect large transitions in central bank agency mbs flows. 17 such concerns can be self - fulfilling : if market participants are concerned that an abrupt shift in flow might be disruptive, they might, for example, withdraw from liquidity provision. an overly fast redemption flow of treasuries could also create challenges in the government ’ s management of public debt auctions and result in communications challenges. 18 a sustained portfolio runoff at an overly fast pace could also shrink the balance sheet so quickly that it impacts other aspects of monetary policy implementation. rapid portfolio declines could have unforeseen impacts on overnight money markets, for example by creating significant shifts in dealers ’ demand for overnight repo financing. we have seen such impacts in the past. during the maturity extension program, the federal reserve sold substantial amounts of shorter - dated treasuries. some of these securities accumulated in dealers ’ inventories, and secured financing rates rose a bit as dealers sought to finance these holdings. this sort of volatility did not, and would not now, pose a major problem to markets or policy implementation, but it is something worth avoiding if possible. rapid portfolio runoff could also make it more likely that bank reserves become scarce unexpectedly or more quickly than policymakers had anticipated. finally, overly fast portfolio runoff could introduce undesired noise into financial conditions. 5 / 15 bis central bankers'speeches policymakers have indicated that they want the portfolio ’ s size to decline “ in the background, ” and that the federal funds rate be the primary instrument of monetary policy. rapid portfolio runoff could lead market participants

well, our economists have played a role in developing international and domestic regulatory policy with respect to bank capital and liquidity standards. for instance, measurement of capital losses over time, and various run - off rates of different types of liabilities by our economists informed this work. also, our economists ’ work on broker - dealer liquidity informed the design of the liquidity coverage ratio. finally, our economists pay special attention to the emerging area of financial stability monitoring. this takes place in a number of realms, including participation in the work of the basel committees, such as the committee on global financial stability ( cgfs ) of the bis, that i currently chair, and the committee on payments and settlement systems ( cpss ), which i once chaired, the numerous workgroups and committees of the financial stability board, and ongoing contributions to the financial stability oversight council ( fsoc ). with respect to the fsoc, for example, new york and chicago fed economists have played a key role in editing the fsoc annual reports. a few other examples of our economists ’ involvement in prudential and regulator policy include : gse reform and housing market policy. our economists, working with staff in the markets group, have published two staff reports detailing a framework for replacing the gses and implementing an explicit government guarantee to protect against tail risks in residential real estate. this work has included briefings of congressional staff and congressional testimony. triparty repo reform. working with the other areas of the bank and board of governors staff, economists have helped to design and implement reforms that make the triparty repo market more stable and less prone to “ run ” risk. reference rate reform. new york fed economists and members of the markets group are deeply involved in the fsb ’ s efforts to reform the reference rate setting process for libor and other reference rates. monetary policy and macroeconomic policy economists provide invaluable input to the new york fed president, who serves as vicechairman of the fomc, and to the markets group, which is responsible for the operational aspects of monetary policy implementation. this work has many aspects, including : independent macroeconomic forecasts. this includes a new york fed dsge model and a suite of products to analyze labor market developments. 2 the development and implementation of new tools, such as the large - scale asset purchase programs, the payment of interest on excess reserves, and the development and testing of a fixed rate, full allotment