Quarterly Report on Federal Reserve
Balance Sheet Developments

Overview

Recent Developments

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 February 24, 2016.

FOMC Raises Target Range for the Federal Funds Rate; Federal Reserve Takes Associated and Related Implementation Steps

• On December 16, 2015, the Federal Open Market Committee (FOMC) announced that it had decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent, from 0 to 1/4 percent. The FOMC also announced that it would maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities (MBS) in agency MBS and of rolling over maturing Treasury securities at auction. Additional information on the FOMC's decision is available at www.federalreserve.gov/newsevents/press/monetary/20151216a.htm and www.federalreserve.gov/monetarypolicy/fomcminutes20151216.htm.
• To implement this monetary policy stance, the FOMC authorized the Federal Reserve Bank of New York (FRBNY) to conduct open market operations, including overnight reverse repurchase operations and previously authorized term reverse repurchase operations, as necessary to maintain the federal funds rate in a target range of 1/4 to 1/2 percent. In related actions, effective December 17, 2015, the Board of Governors of the Federal Reserve System (Board) raised the interest rate paid on required and excess reserve balances to 0.50 percent and approved a 1/4 percentage point increase in the discount rate (the primary credit rate) to 1 percent. Additional information on these implementation steps is available at www.federalreserve.gov/newsevents/press/monetary/20151216a1.htm and www.newyorkfed.org/markets/rrp_op_policies.html.

Federal Reserve Revises Member Dividends and Reduces Aggregate Surplus in Accordance with Legislation

• The Fixing America's Surface Transportation Act (FAST Act), which was enacted on December 4, 2015, amended section 7 of the Federal Reserve Act related to Reserve Bank surplus and the payment of dividends to member banks. The FAST Act changed the dividend rate for member banks with more than $10 billion of consolidated assets, effective January 1, 2016, to the smaller of 6 percent or the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of the dividend. The FAST Act did not change the 6 percent dividend rate for member banks with $10 billion or less of total consolidated assets.
• The FAST Act also limits aggregate Reserve Bank surplus to $10 billion. Accordingly, on December 28, 2015, the Reserve Banks provided a $19.3 billion remittance to the U.S. Treasury in order to reduce this surplus to the FAST Act limit. Before the enactment of the FAST Act, the Board required the Reserve Banks to maintain a surplus equal to the amount of capital paid-in.

Federal Reserve Board Publishes Annual Financial Statements

• On March 18, 2016, the Federal Reserve System released the 2015 audited financial statements for the combined Federal Reserve Banks, the 12 individual Reserve Banks, Maiden Lane Limited Liability Company (LLC), and the Board. Additional information can be found in the section of the report entitled "Federal Reserve Banks' Financial Information." The Federal Reserve System financial statements are available on Board's website at www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm.

FRBNY Concludes Mortgage Operations Counterparty Pilot Program

• On January 6, 2016, the FRBNY announced the conclusion of its Mortgage Operations Counterparty Pilot Program, a program in which a few small broker-dealers acted as counterparties in secondary market outright operations of agency MBS it conducted for the System Open Market Account (SOMA) portfolio. The intent of the program was to explore ways to broaden the range of firms acting as counterparties in the Federal Reserve's open market operations, and to determine the extent to which firms beyond the primary dealer community can augment the FRBNY's operational capacity and resiliency in its monetary policy operations. Additional information is available at www.newyorkfed.org/newsevents/news/markets/2016/an160106 .

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

Item	Current February 24, 2016	Change from October 28, 2015	Change from February 25, 2015
Total assets	4,490	+*	+3
Selected assets
Securities held outright	4,253	+13	+16
U.S. Treasury securities 1	2,461	-1	+1
Federal agency debt securities1	31	-3	-6
Mortgage-backed securities 2	1,761	+17	+21
Memo: Overnight securities lending 3	15	+1	+2
Memo: Net commitments to purchase mortgage-backed securities 4	20	-3	-4
Unamortized premiums on securities held outright 5	187	-5	-17
Unamortized discounts on securities held outright5	-16	+1	+2
Lending to depository institutions 6	*	-*	+*
Central bank liquidity swaps 7	*	-*	+*
Net portfolio holdings of Maiden Lane LLC 8	2	+*	+*
Foreign currency denominated assets 9	20	+1	+*
Total liabilities	4,450	+20	+21
Selected liabilities
Federal Reserve notes in circulation	1,385	+35	+78
Reverse repurchase agreements 10	287	-58	-19
Foreign official and international accounts10	246	+56	+119
Others10	41	-114	-139
Term deposits held by depository institutions	64	+64	-340
Other deposits held by depository institutions	2,426	-242	+79
U.S. Treasury, general account	217	+181	+170
Other deposits 11	59	+39	+53
Total capital	40	-19	-18

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 and federal agency debt securities, amortization is on a straight-line basis. For 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, reflecting values as of December 31, 2015. 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. Fair values are updated 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. Return to table

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