Federal Reserve advisor: Warsh may need five years to shrink the Fed's balance sheet.

According to Mars Finance, on March 26th, Federal Reserve Chairman nominee Kevin Warsh expressed his desire to significantly reduce the Fed's $6.6 trillion balance sheet. A top financial economist stated that he may need more than one term to accomplish this task. Darrell Duffy, a professor at Stanford Graduate School of Business and a long-time advisor to the Fed, pointed out in a new paper that if the Fed wants to significantly reduce its influence in financial markets without causing severe pressure, reforms are needed, including a radical overhaul of bank liquidity requirements and a redesign of the payment system. Once Warsh is confirmed by the U.S. Senate, he can immediately implement some reforms, provided he has the support of his colleagues. Duffy indicated that other reforms could take up to five years, meaning this work will continue beyond Warsh's four-year chairmanship. (Jinshi)