Federal Reserve officials are concerned that bank reserves may "fall sharply".

According to the meeting minutes of the Federal Open Market Committee on July 29th to 30th, bank reserves are expected to decline continuously for the first time since the balance sheet began to shrink in June 2022, due to the expected significant increase in the Treasury General Account size, exhaustion of overnight reverse repurchase agreement tools, and continued reduction in the balance sheet. Some participants pointed out that on key reporting and payment flow days, there may be "further sharp declines". Participants also noted that if such events put pressure on the money market, the Fed's existing tools can provide additional reserves and maintain the effective federal funds rate within the target range. Some participants particularly emphasized the role of standing repurchase agreement facility in monetary policy implementation, as reflected in the increased usage of this tool at the end of the second quarter.