The Federal Reserve's "balance-sheet normalization," which reduced aggregate reserves between 2017 and September 2019, increased repo rate distortions, the severity of rate spikes, and intraday payment timing stresses, culminating with a signi cant disruption in Treasury repo markets in mid-September 2019. In this paper, Darrell Duffie and co-authors show that repo rates rose above eficient-market levels when the total balances held at the Federal Reserve by the largest repo-active bank holding companies were reduced and that repo rate spikes are strongly associated with delayed intraday payments of reserves to these bank holding companies. Intraday payment timing stresses are magnified by early-morning settlement of Treasury security issuances. Substantially higher aggregate levels of reserves than existed in the period leading up to September 2019 would likely have eliminated most or all of these payment timing stresses and repo rate spikes.