Federal Reserve Governor Michael Barr says efforts to shrink the central bank’s balance sheet are the “wrong objective,” warning that such moves involve tradeoffs that could affect financial stability and disrupt money markets. Speaking May 14 at a Money Marketeers of New York University event, Barr argued that reducing the Fed’s balance sheet is not the appropriate goal and cautioned that the policy approach could create unintended consequences for how financial systems function day to day. Another report highlights Barr’s view that decreasing the balance sheet could undermine stability and interfere with the operation of money markets, where liquidity conditions are central to short-term funding and interest rates. The accounts present Barr as urging caution and emphasizing that any balance-sheet reduction would need to be evaluated in terms of its broader effects on market functioning and the stability of the financial system, rather than pursued as an end in itself.