One should not underestimate the risk of prolonged excess liquidity on unwelcomed developments in specific asset classes. Global excess liquidity also reduces investors’ willingness to hold liquidity at the current low level of returns and might fuel their risk appetite. This could provide a renewed chase for performance.
Technology Research and Experimentation Given the range of possible future states with significant digitization of the financial system, it is important that the Federal Reserve is actively engaging with the underlying technologies. Our work to build 24x7x365 instant payments rails leverages lessons from some of today’s most resilient, high-performing, and large-scale technology platforms across the globe.