A Federal Reserve Bank of New York official responsible for implementing monetary policy said on Tuesday that the central bank’s current rate control toolkit would still work in a system that allows banks to hold fewer reserves.

New York Fed System open market account manager Roberto Perli also said the pace of future Treasury bill purchases would be determined by market conditions.

“While the current enforcement framework is very effective, there is active public debate about the amount of reserve supply,” Perley said in the text of a speech to be delivered before a conference hosted by the Atlanta Fed.

“The current adequate reserve enforcement framework is well equipped to manage reductions in the SOMA portfolio” if there were changes in the financial system that allowed lower levels of reserves, Perley said.

The official also said that the Treasury bill initiated late last year for the Fed’s purchases would be managed flexibly going forward to rebuild liquidity after several years of declining Fed holdings. It has already been reduced from $40 billion in purchases per month to the current pace of $10 billion.

“We are prepared to adjust the pace of (reserve management purchases) up or down as needed,” Perley said. (Reporting by Michael S. Derby; Editing by Dan Burns)