By Michael S. Derby

(Reuters) -Federal Reserve Governor Stephen Miran said on Wednesday that easing financial firms’ regulatory burden could allow the U.S. central bank to shrink the size of its balance sheet again in the future.

“As we make more progress peeling back regulations, I expect the optimal level of reserves may drop below where it is now, at least relative to GDP or the size of the banking system,” Miran said in the text of a speech to be delivered to an event hosted by the Bank Policy Institute and Small Business & Entrepreneurship Council in Washington.

If the regulatory footprint gets lighter, “it is possible that in the future, it will be appropriate to resume shrinking the balance sheet; stopping run-off today does not necessarily mean stopping it forever,” Miran said.

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