Description of table L.207 - Federal Funds and Security Repurchase Agreements

Federal funds purchases and security repurchase agreements are a type of short-term borrowing.

Federal funds are overnight borrowings by a depository institution to maintain its required reserve balance at the Federal Reserve. The interest rate at which such borrowings are done is called the federal funds rate.

A security repurchase agreement, also called a repo, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. Repurchase agreements are viewed as collateralized loans, with the difference between the sale price and the repurchase price of the security constituting the interest payment. Repurchase agreements (and reverse repurchase agreements) are often carried out by the Federal Reserve System in order to temporarily inject reserves into (or remove reserves from) the banking system and withdraw them when they are no longer needed (or replace them when the need returns). Government securities dealers use repurchase agreements to finance their inventories.

While some sectors report federal funds purchases or sales separately from security repurchase agreements, it is not possible to show purchases and sales of the two items individually for the whole time series. Federal funds and security repurchase agreements are shown separately for U.S.-chartered depository institutions, which include savings institutions, beginning 2012:Q1; foreign banking offices in the U.S. beginning 2003:Q1, corporate credit unions beginning 2010:Q4, and the Federal Home Loan Banks (FHLB) beginning 2000:Q4. Federal funds of the FHLB include "term" federal funds, while those of the depository institutions do not.

Both the gross asset and liability positions of institutional sectors are shown; that is, transactions between two institutions within the same sector are not netted, aside from netting already present in source data. For depository institutions, repo and reverse repo transactions are included in the federal funds and security repurchase agreements instrument category, rather than in net interbank transactions. Due to the differences in the timing of recording sales and purchases and the short-term nature of many repos, the discrepancy for this instrument is often large.

A June 30, 2014 FEDS Note, "Repurchase Agreements in the Financial Accounts of the United States" by Elizabeth Holmquist and Josh Gallin, describes the construction of this instrument category in more detail. The note is available at

A memo item shows the effective federal funds rate. The federal funds rate is the interest rate at which depository institutions lend excess reserves to each other overnight. The Federal Open Market Committee (FOMC) establishes the target rate for trading in the federal funds market. On December 16, 2008, the FOMC established a target range for the federal funds rate of 0 to 0.25 percent. The target rate remained at this historically low level until December 16, 2015 when the FOMC raised the target range to 0.25 to 0.50 percent. The effective federal funds rate is measured using a weighted average of rates on brokered trades. It is reported on an annualized basis using a 360-day year.

An additional memo item shows the Federal Reserve's reverse repurchase agreement operations, which include both overnight and term reverse repurchase agreements, with money market mutual funds and other financial institutions. Other financial institutions include banks (consolidated), government-sponsored enterprises, and primary dealers. These operations began in 2013:Q3. 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 Meisenzahl, describes these operations in more detail. The note is available at

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