5 Early FOMC discussions of balance sheet normalization, then referred to as “exit strategy,” were predicated on  an intention to return to, as put in the January 28, 2009 meeting transcript, “a more normal framework for conducting monetary policy,” which meant a return to an asset and liability structure closely resembling that which prevailed before the financial crisis. Normalization-related matters were discussed in the minutes to most of the FOMC’s 2009 meetings. In a January 2009 speech, The Crisis and the Policy Response, Chairman Bernanke provided extensive detail on the eventual normalization strategy, including his expectation that the balance sheet would be reduced “to the extent necessary at the appropriate time.” 6 See Potter, Money Markets at a Crossroads: Policy Implementation at a Time of Structural Change, April 5, 2017,  for an assessment of the efficacy of these tools. 7 Currency in circulation has risen steadily for decades. A simple assumption is that currency outstanding will  grow in line with nominal U.S. gross domestic product. However, it is easy to imagine shocks that could materially affect currency growth, either positively or negatively. For example, with heavy usage of largedenomination U.S. paper currency overseas, demand for dollars appears sensitive to changes in global growth and financial and geopolitical stability. In addition, it is hard to know what implications new financial technology, generational shifts in preferences about payment modalities, and other longer-term factors will have on currency demand.
Nor is this a complete assessment, focusing as it does on the prudential angle as opposed to market liquidity considerations. I make them to illustrate the point that it is sensible for us to maintain a spirit of active enquiry about these sorts of issues, and to track developments so that we can intervene if we are concerned that the regulatory system is being arbitraged or simply encouraging the wrong behaviour at firms. Conclusion  We, together with many others, have done a huge amount to make the financial system safer over the last 10 years. But the lesson of financial history is that unless we are absolutely vigilant, and keep questioning both firms and ourselves about evolving and emerging developments in the markets we oversee, then this safety can easily slip through our hands. So our horizon-scanning will be an important part of our effort in the coming period. And as the PRA is holding itself to a flat nominal budget this year I would like to finish by asking any birdspotters present here today to lend us their binoculars, in the national interest.