What Is the Fed Balance Sheet?

The Fed balance sheet is a financial statement listing the assets and liabilities of the Federal Reserve System. Details of the Fed's balance sheet are disclosed by the Fed in a weekly report called "Factors Affecting Reserve Balances." 

Understanding the Fed Balance Sheet

The Fed is the central bank of the United States. Congress founded it in 1913 to ensure the stability of the nation's financial and banking systems.

For much of its history, the Fed's balance sheet was a sleepy topic. Issued every Thursday, the counts the assets and liabilities of the Federal Reserve by type, just as a corporate balance sheet does, providing a consolidated statement of the condition of all 12 regional Federal Reserve Banks.

The Fed's assets consist primarily of government securities it has bought and credit extended to banks and other financial institutions. Its liabilities, meanwhile, include bank and Treasury reserve balances on deposit with the Fed as well as U.S. currency in circulation.

Th💝e Fed Balance Sheet and Quantitative Easing (QE)

The weekly balance sheet report became more important as a financial and economic indicator after the 2008 financial crisis, when the Fed initiated 澳洲幸运5官方开奖结果体彩网:quantitative easing (QE). The Fed balance sheet gave analysts added insight into the scope and scale of Fed market operations. In part🉐icular, it allowed analysts to monitor the pace of asset purchases and sales.

QE is a monetary policy in which a central 𒁃bank purchases large quantities of government bonds or other securities on the open market to hold down long-term interest rates and signal loose monetary policy.

꧅The Fed (and other central banks) have used quantitative easing, also known as large-scale asset purchases, to support economic growth beyond what could be achieved by lowering short-term interest rates to zero.

The policy has drawn political criticism but has become an increasingly common response to economic and credit crises, used effectively by the European Central Ba🌟nk and the Bank of Japan alongside the Fed.

Special Considerations

The Fed's balance sheet may look somewhat like a corporate one, but central banks are unique in their unlimited currency supply. In contrast to a corporation, the Fed and other central banks exist not to make money but to ensure economic and financial stability.

The Fed's role is akin to that of the bank in the board game Monopoly: its goal is not to win but to supply enough money to keep the game going. The right amount of assets for the Fed is that which best enables it to meet its mandate.

The Bottom Line

The Federal Reserve publishes its balance sheet weekly, detailing its current assets and liabilities and the scope of its operations. The balance sheet is used by analysts and economists to help determine the effectiveness of the central bank's actions and the state of the economy