The Fed is now growing its balance sheet roughly in step with the quantity of reserve balances needed by banks within each day to make timely payments to each other. Systemically important banks also demand large quantities of reserve balances to comply with liquidity regulations. If the Fed were to aim for a smaller balance sheet, subject to effective monetary policy implementation, the enabling policies considered by this paper include counteracting unintended shocks to the supply of reserve balances with open market operations, adding a liquidity savings mechanism to the Fed’s largest payment system, ensuring that liquidity regulations don’t discourage banks from using the Fed’s liquidity facilities, and tiering the remuneration of reserves.