In particular, the Federal Reserve’s interest expenses will increase as short-term interest rates rise, while reserve balances initially remain sizable. In addition, policy normalization may well involve significant sales of the Federal Reserve’s agency securities holdings, and losses could be incurred in these sales.
This led to the creation of the new Public Interest Oversight Board of IFAC, which is now busy assuming its new responsibilities. The Public Interest Oversight Board (PIOB) should, over time, lead to enhanced audit standards and practices around the world.