An Update on the Fed’s Balance Sheet

In advance of today’s big announcement from the Bernanke Fed about what, if anything, it intends to do to turn the current economic “recovery” around, it’s worth taking a look at the central bank’s balance sheet that, in recent months, has been shrinking.

Of course, the reason for the recent decline has been the winding down of central bank liquidity swaps set up late last year to help counter the crisis in Europe (another example of how wild-eyed conspiracy theorists were again off the mark as to what that move really signaled).

The only other category that has changed appreciably over the last year is “Other Federal Reserve Assets” within the “Other” category in the chart above. It’s risen from about $130 billion last year at this time to $182 billion as of last week. According to notes in the Fed H.4.1 release:

12. Includes other assets denominated in foreign currencies, which are revalued daily at market exchange rates, and the fair value adjustment to credit extended by the FRBNY to eligible borrowers through the Term Asset-Backed Securities Loan Facility.

The rising U.S. dollar is surely involved here, but, its nearly 10 percent rise only accounts for a small portion of the increase over the last year. There’s a more detailed description in this item at the St. Louis Fed that  also includes “Premiums paid on securities bought” and “Accrued interest and other accounts receivable”.


No comments yet.

Leave a Reply