John C Williams: Theory and practice of monetary policy implementation
Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the European Central Bank conference on Money Markets 2025, Frankfurt am Main, Germany, 7 November 2025.
The views expressed in this speech are those of the speaker and not the view of the BIS.
Introduction
Good morning. It's wonderful to be with you here in Frankfurt. In our interconnected global economy, it's important to have opportunities like this to learn from the perspectives and experiences of others, whether we are academics, market participants, or practitioners of central banking.
The theme of my talk is the theory and practice of monetary policy implementation. Central banks differ in their objectives, strategies, and approaches to monetary policy implementation-all of which influence how they supply reserves, manage balance sheets, and control short-term interest rates.
But like Neapolitan and New York-style pizzas, central banks also share similarities. These were spotlighted in the ways they responded to the global financial crisis and the onset of the COVID-19 pandemic. Many central banks expanded their balance sheets through various quantitative easing programs funded in large part by increases in central bank reserves.
These experiences fundamentally changed the ways many central banks approach the provision of reserves while maintaining control of short-term interest rates. As a result, central banks have reviewed, and in some cases modified, their strategies for supplying reserves and controlling interest rates in ways that reflect the unique features of their jurisdictions. Although their approaches differ in specifics, they share common elements that reflect the fundamental factors that shape the supply and demand for reserves.