The Overview section of this report highlights recent developments in the operations of the Federal Reserve's monetary policy tools and presents data describing changes in the assets, liabilities, and total capital of the Federal Reserve System as of October 25, 2017.
FOMC Initiates Balance Sheet Normalization Program
- On September 20, 2017, the Federal Open Market Committee (FOMC) announced that in October it would initiate a balance sheet normalization program that will gradually reduce the Federal Reserve's securities holdings by decreasing its reinvestment of the principal payments it receives from securities held in the System Open Market Account (SOMA).1 Such principal payments will be reinvested only to the extent that they exceed gradually rising caps. Initially, the decline in SOMA securities holdings will be capped at $6 billion per month for Treasury securities and $4 billion per month for agency debt and agency mortgage-backed securities (MBS). These caps will gradually rise to maximums of $30 billion per month for Treasury securities and $20 billion per month for agency debt and agency MBS and will remain in place through the process of normalizing the size of the balance sheet. Additional information on the FOMC's decision and the balance sheet normalization program is available at www.federalreserve.gov/newsevents/pressreleases/monetary20170920a.htm and www.federalreserve.gov/monetarypolicy/policy-normalization.htm.
Federal Reserve Board Publishes Quarterly Financial Report
- On November 17, 2017, the Federal Reserve System published the "Federal Reserve Banks Combined Quarterly Financial Report" for the third quarter of 2017, which includes summary information on the combined financial position and results of operations of the 12 Reserve Banks. All financial information included in the report is unaudited. The report is available on the Federal Reserve Board's website at www.federalreserve.gov/aboutthefed/combined-quarterly-financial-reports-unaudited.htm.
Federal Reserve System Selected Assets, Liabilities, and Total Capital
Table 1 reports selected assets and liabilities and total capital of the Federal Reserve System and presents the change in these components over selected intervals. The Federal Reserve publishes its complete balance sheet each week in the H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," available at www.federalreserve.gov/releases/h41/.
Figure 1 displays the levels of selected Federal Reserve assets and liabilities, securities holdings, and credit extended through liquidity facilities since April 2010.
Table 1. Assets, liabilities, and capital of the Federal Reserve System
Billions of dollars
October 25, 2017
July 26, 2017
October 26, 2016
|Securities held outright||4,243||1||25|
|U.S. Treasury securities 1||2,466||1||2|
|Federal agency debt securities1||7||-1||-12|
|Mortgage-backed securities 2||1,771||2||35|
|Memo: Overnight securities lending 3||25||3||5|
|Memo: Net commitments to purchase mortgage-backed securities 4||18||-1||-21|
|Unamortized premiums on securities held outright 5||162||-3||-15|
|Unamortized discounts on securities held outright5||-14||+*||1|
|Lending to depository institutions 6||*||-*||+*|
|Central bank liquidity swaps 7||*||-*||-4|
|Net portfolio holdings of Maiden Lane LLC 8||2||+*||+*|
|Foreign currency denominated assets 9||21||+*||+*|
|Federal Reserve notes in circulation||1,537||22||105|
|Reverse repurchase agreements 10||348||4||-37|
|Foreign official and international accounts10||236||-5||-7|
|Term deposits held by depository institutions||14||14||-34|
|Other deposits held by depository institutions||2,242||-52||177|
|U.S. Treasury, General Account||185||2||-235|
|Other deposits 11||83||5||30|
Note: Unaudited. Components may not sum to totals because of rounding.
* Less than $500 million.
1. Face value. Return to table
2. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The current face value shown is the remaining principal balance of the securities. Return to table
3. Securities loans under the overnight facility are off-balance-sheet transactions. These loans are shown here as a memo item to indicate the portion of securities held outright that have been lent through this program. Return to table
4. Current face value. Includes commitments associated with outright purchases, dollar rolls, and coupon swaps. Return to table
5. Reflects the premium or discount, which is the difference between the purchase price and the face value of the securities that has not been amortized. For U.S. Treasury securities, federal agency debt securities, and mortgage-backed securities, amortization is on an effective-interest basis. Return to table
6. Total of primary, secondary, and seasonal credit. Return to table
7. Dollar value of the foreign currency held under these agreements valued at the exchange rate to be used when the foreign currency is returned to the foreign central bank. This exchange rate equals the market exchange rate used when the foreign currency was acquired from the foreign central bank. Return to table
8. Fair value. Fair value reflects an estimate of the price that would be received upon selling an asset if the transaction were to be conducted in an orderly market on the measurement date. Assets are revalued quarterly. Return to table
9. Revalued daily at current foreign currency exchange rates. Return to table
10. Cash value of agreements, which are collateralized by U.S. Treasury securities, federal agency debt securities, and mortgage-backed securities. Return to table
11. Includes deposits held at the Reserve Banks by international and multilateral organizations, government-sponsored enterprises, and designated financial market utilities. Also includes certain deposit accounts other than the U.S. Treasury, General Account, for services provided by the Reserve Banks as fiscal agents of the United States. Return to table
Figure 1. Credit and liquidity programs and the Federal Reserve's balance sheet
1. Because of the timing of the settlement of reinvestment purchases, the decline in the Federal Reserve's securities holdings as a result of this change in reinvestment policy will not begin to be apparent until November. Return to text