Federal Reserve Bank of New York markets chief Simon Potter said Wednesday that the stimulus efforts in the wake of the financial crisis, known as "quantitative easing," were conducted successfully without market disruptions. But he said the central bank is reviewing the complexities involved with selling assets it acquired through QE, given its narrower experience there, and the potential for purchasing additional agency bonds if needed.

Mr. Potter's remarks, at a conference about monetary policy implementation in the long run at the Minneapolis Fed, come as the U.S. central bank has been contemplating the next chapter of its monetary policy framework, despite its guidance to market participants that bond sales aren't anticipated soon.

"Given the Federal Reserve's experience in the agency [mortgage bond] market over the past eight years, it is important to consider what role—if any—agency MBS transactions may have in the policy implementation tool kit of the future," said Mr. Potter in the speech.

Mr. Potter said the New York Fed's trading desk is preparing itself for "a wide variety of scenarios" well ahead of time, "including sales or the need to purchase additional agency MBS." This is necessary because of the changing liquidity dynamics in the bond market and specialized trading needed to ensure smooth sales when needed, he said.

The Fed expanded its balance sheet through large scale bond-buying programs since the 2008 collapse to stimulate the economy and financial markets. One in November 2008 was designed to support mortgage and housing markets. Another launched in September 2012 was focused on lowering interest rates to ease broader financial market conditions.

Now having loaded up on bonds, the Fed is reinvesting principal payments on agency mortgage bonds on the central bank's behalf back into those same mortgage bonds. Its experience with buying bonds after the crisis suggests those programs "have been successful," said Mr. Potter, but he said the Fed's experiencing with selling them is "limited to a few small value exercises."

Away from the U.S., central bankers have expanded their large-scale asset purchases beyond sovereign bonds to privately issued corporate debt and asset-backed securities, maneuvers not open to the U.S. central bank under the Federal Reserve Act.

"Central banks that are currently buying nonsovereign assets…have a similar lack of experience with sales," said Mr. Potter.

The Fed hasn't signaled its intentions to provide new stimulus by purchasing nonsovereign bonds, but Mr. Potter nevertheless said the idea has merit and would typically require a central bank to learn more about participating in those new markets. He said the concept was useful as a backdrop, even though the U.S. Treasury market where the Fed currently is the deepest and most liquid market in the world, with few capacity hurdles.

"The purchase of nonsovereign assets can be helpful by providing additional channels for monetary accommodation to be realized," said Mr. Potter. "Further, having additional markets to operate in can help central banks overcome functional limitations that could exist if they were restricted to [asset purchases] in only one market."

When the Fed was buying huge piles of Treasurys under its bond-buying programs following the financial crisis, it was able to purchase them quickly without affecting market functioning, Mr. Potter said. The Treasury market is a $13 trillion market.

The agency mortgage market is the second most liquid, at $5.7 trillion, and is deeper than most foreign sovereign debt markets with an estimated $200 billion in daily trading volume, Mr. Potter said. The New York Fed purchased $34.5 billion of those agency mortgage bonds in July alone, across thousands of individual securities.

"The Federal Reserve maintains a regular presence in the agency MBS market, with near daily purchase operations," as it reinvests monthly payments of principal on its existing holdings, he said. The Fed hasn't guided market participants that it anticipates selling agency mortgage bonds, "other than potentially to eliminate residual holdings."

Write to Katy Burne at katy.burne@wsj.com

(END) Dow Jones Newswires

October 19, 2016 14:55 ET (18:55 GMT)