Description of table L.109 - Monetary Authority

The monetary authority sector is the group of institutions and financial accounts that supply reserve funds to depository institutions and absorb funds from them. The sector includes the 12 Federal Reserve Banks and their subsidiary offices (but not the Board of Governors of the Federal Reserve System) as well as certain monetary accounts of the U.S. Treasury: monetary gold stock; the special drawing rights certificate account; and Treasury currency, which consists of standard silver dollars, fractional coin, national bank notes, and currency items in the process of retirement. These Treasury accounts are excluded from the assets and liabilities of the U.S. federal government sector in the financial accounts.

Historically, the largest asset of the monetary authority sector is Treasury securities, which the Federal Reserve System buys and sells through open market operations to conduct monetary policy, while the primary liabilities are currency and reserve deposits. However, because of the financial crisis of 2008, the Federal Reserve's balance sheet expanded on the asset side to include significant amounts of loans to financial institutions, purchases of Treasury securities and agency- and GSE-backed securities, and reciprocal currency arrangements (swap lines) with foreign central banks. On the liability side, this expansion was funded by the U.S. Treasury's increased deposits in a temporary supplementary financing account at the Federal Reserve and by depository institutions holding much higher reserves.

The Federal Reserve's reverse repurchase agreement operations, which began in 2013:Q3, are shown as detail under the security repurchase agreement liability. A March 24, 2015 FEDS Note, "The Federal Reserve's Overnight and Term Reverse Repurchase Agreement Operations in the Financial Accounts of the United States" by Ralf Meisensahl, describes these operations in more detail. The note is available at http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/federal-reserves-overnight-and-term-rrp-agreement-operations-in-financial-accounts-of-the-united-states-20150324.html.



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