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Federal Reserve Board Member Milan: The Fed cannot cancel the interest on reserves payments at this time.
Golden Finance reports that Federal Reserve Board member Stephen Milian stated that considering stopping the Fed's payment of interest on reserve balances is unrealistic. "I think, under the current monetary policy implementation framework and banking supervision system, we somewhat force banks to hold reserves, and you can't really eliminate the interest on reserve balances," Milian said. Some Republican lawmakers, including Florida Senator Rick Scott, support legislation to stop the Fed from paying interest on reserves. Milian stated, "If you want to consider reducing" the expenditure on reserve balances, that is "a downstream part of the banking regulation framework." He added, "We must first consider how to improve the banking regulation framework so that the size of the Fed's balance sheet can be reduced." He said, "Addressing the interest rate on reserve balances before solving regulatory system issues is completely backwards."

