Board of Governors of the Federal Reserve System

Purpose

The Federal Reserve prepares this balance sheet report to help fulfill its commitment to transparency about actions taken in connection with two of its key functions—conducting monetary policy to meet its congressional mandate and promoting financial stability.

This report provides an overview of the change in the size and composition of the Federal Reserve's balance sheet between March 11 and August 12, 2020, a period that reflects the forceful efforts the Federal Reserve has taken to support jobs and the broader economy during the disruptions caused by the COVID-19 pandemic. In addition, it includes recent developments and background information on the key line items on the Federal Reserve's balance sheet (including links to more detailed online information).

The Balance Sheet and Its Role in the Federal Reserve's Key Functions

The Federal Reserve conducts U.S. monetary policy in accordance with its mandate from Congress: to promote maximum employment and stable prices in the U.S. economy. Financial stability is an important prerequisite for achieving these goals. As a result, the Federal Reserve monitors financial stability risks and takes appropriate actions to help ensure that financial institutions and financial markets are able to efficiently channel the flow of credit to households, communities, and businesses.

The Federal Reserve considers transparency about the goals, conduct, and stance of monetary policy to be fundamental to the effectiveness of monetary policy. Transparency about monetary policy also helps promote the accountability of the Federal Reserve to Congress and the public.

The Federal Reserve's Response to COVID-19

Over the past several months, the United States and the world have faced unprecedented challenges from the COVID-19 pandemic. It has taken a tragic and growing toll in illnesses and lost lives, forced many U.S. businesses to close, and thrown millions of people out of work. The effect on the economy has been severe, particularly in the second quarter, disrupting financial markets and impairing the flow of credit.

Without access to credit, families can be forced to cut back on necessities and could lose their homes. Businesses can be forced to downsize or permanently close, resulting in further losses of jobs and incomes and worsening the economic downturn. Preserving the flow of credit and reducing borrowing costs is thus essential for mitigating the damage to the economy from the pandemic and setting the stage for the recovery.

Beginning in March, the Federal Reserve acted with unprecedented speed and force to cut the federal funds rate to close to zero and also took broad and forceful measures to preserve the flow of credit in the economy. These measures are reflected in a significant increase in the size and evolving composition of the balance sheet between March 11 and August 12, 2020.

This report documents the changes in select assets and liabilities of the Federal Reserve's balance sheet and also highlights the key Federal Reserve actions and programs that contributed to those changes. In addition to documenting changes in the Federal Reserve's balance sheet, this report, and those in coming quarters, will be a valuable resource for the public to help provide the context for and details of the Fed's response to the pandemic.

More Information and Disclosure

The appendix of this report contains information about the transparency provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) as well as the Federal Reserve's compliance with those provisions as it responds to the COVID-19 pandemic.

For more information and data on the Federal Reserve's emergency facilities and other activities in response to the COVID-19 pandemic, see https://www.federalreserve.gov/covid-19.htm.