Analysis: The Federal Reserve's new bond purchase plan is essentially QE, and stablecoins are the most pressing issue of monetary quality at present

Former Morgan Stanley NFA trader Jeff Park posted on the X platform that the Federal Reserve's recently announced reserve management-driven purchasing program, although labeled as "reserve management," is essentially still QE, just upgraded from "quantitative easing" to "qualitative easing."

Under the ample reserves framework, reserves have perfect balance sheet flexibility due to a 0% risk weight under LCR, far surpassing short-term Treasury securities. This also explains why the SLR rule was suddenly relaxed before Thanksgiving and why a $40 billion monthly purchasing plan was quickly announced within two weeks before the end of QT.

In short, short-term Treasury securities are "near-money," while reserves are "perfect money." Additionally, Jeff Park added that stablecoins are the most pressing "currency quality" issue at present, which is why cryptocurrencies are simply not going to disappear.