framework was higher than they previously had thought. following the mid - september volatility, the committee stated that it would seek to maintain, over time, a level of bank reserves at or above the level that prevailed in early september, a level that we believe is sufficient to operate an ample - reserves regime. looking ahead, i judge that it is reasonable that we ask ourselves whether it may be possible to operate with a lower level of reserves and remain consistent with the ample framework. see the statement regarding monetary policy implementation and balance sheet normalization in note 6. - 8i will spend the remainder of my time exploring possible means to enhance the efficiency of our monetary policy implementation, including reserve provision, through adjustments to our existing regulatory and supervisory regime. in particular, i will focus on liquidity regulation and supervision as well as interactions with monetary policy tools. and i will suggest a policy - based approach to some of the issues i identify. before going into more detail about what i mean, let me emphasize that i will be touching on some issues that the federal reserve is in the process of observing and evaluating and, in some cases, may be far from reaching any final decisions. as such, my thoughts on these issues are my own and are likely to evolve, benefiting from further analysis and monitoring of bank behavior and financial markets over time. let me take a step back to highlight some of the key features of the current liquidity regulation and supervision regime, features that have resulted in significant increases in the liquidity resilience and risk - management capabilities of our largest institutions. taken together, these features — including the liquidity coverage ratio ( lcr ), regulation yy ’ s enhanced prudential standards, and resolution planning — require large firms to demonstrate that they hold sufficient liquid assets to meet outflows in stressed scenarios and in resolution. in short, we expect firms to manage their liquidity risk prudently — to self - insure — so they can withstand the types of runs we saw during the crisis without relying on taxpayer support. this outcome has contributed to a more resilient financial system and leaves taxpayers in a much better place today. following the implementation of these requirements, large banks have more than doubled their buffers of liquid assets. more specifically, our largest banks have - 9significantly increased their holdings of assets known as level 1 high - quality liquid assets ( hqla ). level 1 hqla includes central bank reserves, treasury securities, and gin

react to economic downturns — even when the policy rate is very low — will support the resilience of longer - term inflation expectations at levels consistent with the fomc ’ s objective. keeping inflation expectations anchored will in turn further support the fomc ’ s ability to lower real interest rates if the economy were to weaken substantially. balance sheet policies and reserve demand taking stock, i note that one approach to the constraints on policy imposed by the current low level of interest rates is to make what were previously unconventional tools — balance sheet policies and forward guidance — as conventional as possible. although i fully support the fomc ’ s current plan to purchase treasury bills and increase the size of the balance sheet in the very short term, over the longer - term, i believe that the viability of balance sheet policies is enhanced if we can show that we can meaningfully shrink the size of the balance sheet relative to gross domestic product following a recession - induced balance sheet expansion. in effect, i believe that balance sheet policies are more credible if see the statement regarding monetary policy implementation and balance sheet normalization, which is available on the board ’ s website at https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20190130c. htm. - 7we can show that there is not a persistent ratcheting - up effect in the size of the fed ’ s asset holdings. of course, the balance sheet is not going back to pre - crisis levels, when the size was primarily determined by the fed ’ s currency liabilities. as the fomc announced in january of 2019, the committee intends to implement monetary policy in an amplereserves regime. 7 with that approach, control over the level of the federal funds rate and other short - term interest rates is exercised primarily through the setting of the federal reserve ’ s administered rates and is not, over the longer term, reliant on frequent and large open market operations. the committee also reiterated that it would assess the level of reserves most consistent with efficient and effective monetary policy implementation. questions about this level have moved to the forefront following market dislocations and money market pressure amid a temporary, but pronounced, reduction in the supply of reserves as a result of an increase in our nonreserve liabilities in september. indeed, this episode has been cited by a number of firms and analysts who estimate that the amount of reserves consistent with an ample