John C. Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York and Vice Chair of the Federal Open Market Committee (FOMC), who holds a permanent, non-rotating voting seat on the Committee, a status unique to the New York Fed presidency, speaking at the 2026 U.S. Treasury Market Conference in New York City, in prepared remarks, steered clear of monetary policy and the economic outlook entirely, keeping his focus on the mechanics behind how the Fed actually carries out policy.
His core message: as financial markets evolve, the Fed's policy tools must evolve with them. It is imperative, he said, that the Fed's toolkit stays fit for purpose and functions effectively under all circumstances, and the Fed's job is to stay ahead of that evolution so there is never, in his words, a cloudy day.
Turning to market structure, Williams flagged the Fed's close watch on the growing share of centrally cleared repo trading and what that shift means for both market functioning and policy implementation.
On reserves, he was direct: if underlying demand shifts because of regulatory or structural changes, the Fed will match that with a corresponding shift in the supply of reserves over time. That approach sits inside the ample-reserves framework, which he explained delivers effective interest-rate control while minimizing the opportunity cost of holding reserves, a cost he stressed should not exist at all.
He was equally direct on rate control itself, calling it foundational and a core Fed responsibility, and pointed to the current system's strong record of delivering it while supporting smooth market functioning. The Fed, he added, needs to stay active in the markets that matter most for policy transmission.
Rounding out his remarks, Williams turned to newer terrain: stablecoins and tokenized finance. The Fed must keep studying their development, identify the potential ramifications, and stay actively engaged as markets continue to shift. He closed on a note of partnership, underscoring the importance of continued cooperation between the public and private sectors as the Treasury market and its supporting infrastructure evolve, and offered a memorable line to drive it home: when the public and private sectors work side by side with determination toward a common goal, he said, they can move mountains.
Key Quotes:
Monetary Policy Implementation & Market Evolution
It is imperative that as financial markets evolve, the Fed has policy tools that are fit for purpose and well designed to function effectively under all circumstances.
The Federal Reserve will adjust its monetary policy implementation strategy as needed as financial markets and market conditions evolve.
The Fed's role is to be prepared for the evolution of financial markets so that there is never a cloudy day.
Central Clearing & Repo Markets
The Federal Reserve is monitoring the rise of centrally cleared repo trading and its implications for financial market functioning and monetary policy implementation.
As financial markets move toward greater central clearing, the Fed must continue to monitor market structure and understand how these changes affect monetary policy implementation.
Supply of Reserves & Ample Reserves
If underlying demand for reserves shifts because of changes in regulation, market structure, or other factors, the Federal Reserve will match that with a shift in the supply of reserves over time.
The ample-reserves framework is designed to provide effective interest-rate control while minimizing the opportunity cost of holding reserves.
Interest-Rate Control
Effective interest-rate control is absolutely foundational and a core responsibility of the Federal Reserve.
The Fed's rate-control system has been very effective at delivering interest-rate control and supporting the smooth functioning of financial markets.
The Federal Reserve needs to remain active in the financial markets that matter for the transmission of monetary policy.
Opportunity Cost of Reserves
There should be no opportunity cost to holding reserves.
A high opportunity cost of holding reserves is inefficient and creates distortions that interfere with market functioning and stability.
Stablecoins, Tokenized Finance & Market Innovation
The Federal Reserve must continue to study the development of stablecoins, tokenized finance and evolving financial market structures, identify their potential ramifications, and engage actively on these issues as financial markets evolve.
Treasury Market & Public-Private Cooperation
When the public and private sectors work side by side with determination toward a common goal, we can move mountains.
Continued cooperation between the public and private sectors is important as the U.S. Treasury market and its supporting infrastructure evolve.
Policy & Economic Outlook
Williams did not comment on monetary policy or the economic outlook.