1. Factors Affecting Reserve Balances of Depository Institutions accessible
H.4.1 Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks [title]: No description
1. Factors Affecting Reserve Balances of Depository Institutions [title]: No description
Millions of dollars [title]: No description
Reserve Bank credit, related items, and reserve balances of depository institutions at Federal Reserve Banks [column]: No description
Averages of daily figures [column]: The figures in column two are seven-day averages of the daily values for each item. The seven days end on the Wednesday date shown, and begin on the Thursday before. The figures in columns three and four are the changes in the item from the seven-day average in column two to the average of the seven days ending on the prior Wednesday (column three) and to the average of the seven days ending on the Wednesday one year prior (column four).
Week ended - sub-column of Averages of daily figures : No description
Change from week ended - sub-column of Averages of daily figures : No description
Wednesday [column]: The figures in column five are the values for each item at the close of business on the Wednesday date shown.
Reserve Bank credit [row]:
Reserve Bank credit includes securities held outright, unamortized premiums on securities held outright, unamortized discounts on securities held outright, repurchase agreements, other loans, net portfolio holdings of Maiden Lane LLC, float, central bank liquidity swaps, and other Federal Reserve assets.
Securities held outright - sub-row of Reserve Bank credit [row]: The amount of securities held by Federal Reserve Banks. This quantity is the cumulative result of permanent open market operations: outright purchases or sales of securities, conducted by the Federal Reserve. Section 14 of the Federal Reserve Act defines the securities that the Federal Reserve is authorized to buy and sell.
U.S. Treasury securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]:
The total face value of U.S. Treasury securities held by the Federal Reserve. This total is broken out in the lines below. Purchases or sales of U.S. Treasury securities by the Federal Reserve Bank of New York (FRBNY) are made in the secondary market, or with various foreign official and international organizations that maintain accounts at the Federal Reserve. FRBNY's purchases or sales in the secondary market are conducted only through primary dealers.
Bills - sub-row of U.S. Treasury securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]: No description
Notes and bonds, nominal - sub-row of U.S. Treasury securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]: No description
Notes and bonds, inflation-indexed - sub-row of U.S. Treasury securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]: No description
Inflation compensation - sub-row of U.S. Treasury securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]: No description
Federal agency debt securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]: The current face value of federal agency obligations held by Federal Reserve Banks. These securities are direct obligations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.
Mortgage-backed securities - sub-row of Securities held outright - sub-row of Reserve Bank credit [row]: The current face value of mortgage-backed obligations held by Federal Reserve Banks. These securities are guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae.
Unamortized premiums on securities held outright - sub-row of Reserve Bank credit [row]: This release reports Federal Reserve holdings of securities at face value, not necessarily at market value. If the Federal Reserve pays more than the face value for securities it purchases, the premiums over the face value are amortized over time. For U.S. Treasury and Federal agency debt securities, amortization is on a straight-line basis, which results in a constant amount of amortization in each period. For mortgage-backed securities, amortization is on an effective-interest basis, which results in a constant effective yield in each period, and the amortization is accelerated when principal payments are received. As the unamortized premiums on securities are reduced, a simultaneous balancing reduction is made in the capital account. Securities purchased at a premium over face value are accounted for in this way because, at maturity, the Federal Reserve Banks receive only the face amount of the securities, not the amount actually paid.
The premiums paid on securities bought under repurchase agreements, though, are not amortized. These premiums are, in effect, returned to the Federal Reserve Banks when the securities are repurchased by the dealer, since the negotiated price in the original transaction reflects the premiums.
Unamortized discounts on securities held outright - sub-row of Reserve Bank credit [row]: This release reports Federal Reserve holdings of securities at face value, not necessarily at market value. If the Federal Reserve pays less than the face value for securities it purchases, the discounts under the face value are amortized over time. For U.S. Treasury and Federal agency debt securities, amortization is on a straight-line basis, which results in a constant amount of amortization in each period. For mortgage-backed securities, amortization is on an effective-interest basis, which results in a constant effective yield in each period, and the amortization is accelerated when principal payments are received. Securities purchased at a discount under face value are accounted for in this way because, at maturity, the Federal Reserve Banks receive only the face amount of the securities, not the amount actually paid. While discounts are typically reported as a liability, this release is presenting them with the corresponding securities held outright, which is in the assets section.
The discounts paid on securities bought under repurchase agreements, though, are not amortized. These discounts are, in effect, returned to the Federal Reserve Banks when the securities are repurchased by the dealer, since the negotiated price in the original transaction reflects the discounts
Repurchase agreements - sub-row of Reserve Bank credit [row]:
Repurchase agreements reflect some of the Federal Reserve's temporary open market operations. Repurchase agreements are transactions in which securities are purchased from a foreign official or others, such as a primary dealer under an agreement to sell them back on a specified date in the future. The difference between the purchase price and the repurchase price reflects an interest payment.
The Federal Reserve may enter into repurchase agreements for up to 65 business days, but the typical maturity is between one and 14 days. Federal Reserve repurchase agreements supply reserve balances to the banking system for the length of the agreement. The Federal Reserve employs a naming convention for these transactions based on the perspective of the foreign and international monetary authorities under the FIMA Repo Facility and others, such as primary dealers: the dealers receive cash while the Federal Reserve receives the collateral.
Foreign official - sub-row of Repurchase agreements - sub-row of Reserve Bank credit [row]: No description
Other - sub-row of Repurchase agreements - sub-row of Reserve Bank credit [row]: No description
Loans - sub-row of Reserve Bank credit [row]:
Loans is the sum of "Primary credit,” "Secondary credit," "Seasonal credit," and credit extended through the “Primary Dealer Credit Facility,” “Paycheck Protection Program Liquidity Facility,” “Bank Term Funding Program,” and "Other credit extensions”.
Primary credit - sub-row of Loans - sub-row of Reserve Bank credit [row]:
Primary credit is a lending program that serves as the principal safety valve for ensuring adequate liquidity in the banking system. It is available to depository institutions that are in generally sound financial condition, and there are no restrictions on the use of funds borrowed under primary credit. Primary credit is priced relative to the Federal Open Market Committee's (FOMC) target range for the federal funds rate.
Secondary credit is a lending program that is available to depository institutions that are not eligible for primary credit. It is extended on a very short-term basis, typically overnight, at a higher rate than the primary credit rate. In contrast to primary credit, there are restrictions on the uses of secondary credit extensions. Secondary credit is available to meet backup liquidity needs when its use is consistent with a timely return by the borrower to a reliance on market sources of funding or the orderly resolution of a troubled institution. Secondary credit may not be used to fund an expansion of the borrower's assets. Moreover, the secondary credit program entails a higher level of Reserve Bank administration and oversight than the primary credit program. Reserve Banks typically apply higher haircuts on collateral pledged to secure secondary credit.
Seasonal credit is a lending program that is available to assist small depository institutions with demonstrated liquidity pressures of a seasonal nature and will not normally be available to institutions with deposits of $500 million or more. Institutions that experience and can demonstrate a clear pattern of recurring intra-yearly fluctuations in deposits and loans – caused by construction, college, farming, resort, municipal financing and other seasonal types of business – frequently qualify for the seasonal credit program. Eligible depository institutions may qualify for term funding for up to nine months of seasonal need during the calendar year, enabling them to carry fewer liquid assets during the rest of the year and, thus, allowing them to make more funds available for local lending. The interest rate applied to seasonal credit is a floating rate based on market rates.
Secondary credit - sub-row of Loans - sub-row of Reserve Bank credit [row]: No description
Seasonal credit - sub-row of Loans - sub-row of Reserve Bank credit [row]: No description
Paycheck Protection Program Liquidity Facility - sub-row of Loans - sub-row of Reserve Bank credit [row]: No description
Bank Term Funding Program - sub-row of Loans - sub-row of Reserve Bank credit [row]: No description
Other credit extensions - sub-row of Loans - sub-row of Reserve Bank credit [row]: Includes outstanding loans to depository institutions that were subsequently placed into Federal Deposit Insurance Corporation (FDIC) receivership, including depository institutions established by the FDIC. The Federal Reserve Banks’ loans to these depository institutions are secured by pledged collateral, and the FDIC provides repayment guarantees.
Net portfolio holdings of MS Facilities 2020 LLC (Main Street Lending Program) - sub-row of Reserve Bank credit [row]:
On July 6, 2020, the Main Street Lending Program announced it was operationally ready to purchase participations in loans originated by eligible lenders, and on July 15 2020, the MS Facilities 2020 LLC began purchasing those loan participations. The Federal Reserve Bank of Boston extended credit to the MS Facilities 2020 LLC under the authority of section 13(3) of the Federal Reserve Act. MS Facilities 2020 LLC is a special purpose vehicle that was formed to help ensure credit flows to small and medium-sized businesses and to eligible nonprofits, under the Main Street New Loan Facility, Main Street Priority Loan Facility, Main Street Expanded Loan Facility, Nonprofit Organization New Loan Facility, and Nonprofit Organization Expanded Loan Facility. The assets of the MS Facilities 2020 LLC and the amount provided by U.S. Treasury as credit protection to the FRBB are used to secure the loan from the FRBB.
The Federal Reserve Bank of Boston (FRBB) is the managing member of the MS Facilities 2020 LLC. Consistent with generally accepted accounting principles, the assets and liabilities of the MS Facilities 2020 LLC have been consolidated with the assets and liabilities of the FRBB in the preparation of the statements of condition. As a consequence of the consolidation, the loan from the FRBB to MS Facilities 2020 LLC is eliminated, the net assets of the MS Facilities 2020 LLC appear as assets above, and the liabilities of the MS Facilities 2020 LLC to entities other than the FRBB, including those with recourse only to the portfolio holdings of the MS Facilities 2020 LLC are included in other liabilities in this table. Net portfolio holdings of the LLC includes assets purchased pursuant to terms of the credit facility and amounts related to Treasury contributions to the facility.
Net portfolio holdings of Municipal Liquidity Facility LLC - sub-row of Reserve Bank credit [row]:
On June 2, 2020, the Municipal Liquidity Facility LLC (MLF LLC) began purchasing eligible municipal notes and on June 5, 2020, settlement of the first purchase transactions occurred. The Federal Reserve Bank of New York (FRBNY) began extending loans to the MLF LLC under the authority of section 13(3) of the Federal Reserve Act. MLF LLC is a special purpose vehicle that was formed to help support state and local governments better manage cash flow pressures in order to continue to serve households and business in their communities. The assets of the MLF LLC and the amount provided by U.S. Treasury as credit protection to the FRBNY are used to secure the loan from the FRBNY.
The FRBNY is the managing member of MLF LLC. Consistent with generally accepted accounting principles, the assets and liabilities of the MLF LLC have been consolidated with the assets and liabilities of the FRBNY in the preparation of the statements of condition. As a consequence of the consolidation, the loan from the FRBNY to MLF LLC is eliminated, the net assets of the MLF LLC appear as assets above, and the liabilities of the MLF LLC to entities other than the FRBNY, including those with recourse only to the portfolio holdings of the MLF LLC are included in other liabilities in this table. Net portfolio holdings of the LLC Includes assets purchased pursuant to terms of the credit facility and amounts related to Treasury contributions to the facility. MLF LLC asset balances from trading activity may be reported in this release on a one-day lag after the transaction date.
Net portfolio holdings of TALF II LLC - sub-row of Reserve Bank credit [row]:
On June 25, 2020, the TALF II LLC began extending eligible loans under the Term Asset-Backed Securities Loan Facility to facilitate the issuance of asset-based securities. The Federal Reserve Bank of New York extended credit to the TALF II LLC under the authority of section 13(3) of the Federal Reserve Act. TALF II LLC is a special purpose vehicle that was formed to help support the flow of credit to consumers and businesses. The assets of the TALF II LLC and the amount provided by the U.S. Treasury as credit protection for the TALF II LLC are used to secure the loan from the FRBNY.
The Federal Reserve Bank of New York (FRBNY) is the managing member of TALF II LLC, the Term Asset-Backed Securities Loan Facility. Consistent with generally accepted accounting principles, the assets and liabilities of the TALF II LLC have been consolidated with the assets and liabilities of the FRBNY in the preparation of the statements of condition. As a consequence of the consolidation, the loan from the FRBNY to TALF II LLC is eliminated, the net assets of the TALF II LLC appear as assets above, and the liabilities of the TALF II LLC to entities other than the FRBNY, including those with recourse only to the portfolio holdings of the TALF II LLC are included in other liabilities in this table. Net portfolio holdings of the LLC includes assets purchased pursuant to terms of the credit facility and amounts related to Treasury contributions to the facility.
Float - sub-row of Reserve Bank credit [row]:
Reserve balances can be affected by mismatches in check-clearing operations. When a check is received by a Reserve Bank, the depositing institution's account is credited according to a fixed schedule, regardless of when the check is presented to the bank on which it is drawn. When there are delays in the presentment of checks to the paying institution, the receiving institution's account is credited before the account of the paying depository institution is charged, elevating reserve balances. Conversely, if the paying institution's account is debited faster than the schedule for crediting the receiving institution's account, reserve balances are reduced. These increases or decreases in reserve balances that result from mismatches in the timing of check clearing are known as float. As-of adjustments were discontinued on July 12, 2012. Prior to the elimination of as-of adjustments, float figures also included the net amount of float-related adjustments.
Central bank liquidity swaps - sub-row of Reserve Bank credit [row]: The FOMC has authorized temporary reciprocal currency arrangements (central bank liquidity swaps) with certain foreign central banks to help provide liquidity in U.S. dollars to overseas markets.
These swaps involve two transactions. First, when the foreign central bank draws on the swap line, it sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate. The foreign currency that the Federal Reserve acquires is placed in an account for the Federal Reserve at the foreign central bank. This line in the statistical release reports the dollar value of the foreign currency held under these swaps.
Second, the dollars that the Federal Reserve provides are deposited in an account for the foreign central bank at the Federal Reserve Bank of New York. At the same time as the draw on the swap line, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction in which the foreign central bank is obligated to repurchase the foreign currency at a specified future date at the same exchange rate. At the conclusion of the second transaction, the foreign central bank pays a market-based rate of interest to the Federal Reserve. Central bank liquidity swaps are of various maturities, ranging from overnight to three months.
Other Federal Reserve assets - sub-row of Reserve Bank credit [row]: The major components of other Federal Reserve assets include:
Accrued interest, which represent the daily accumulation of interest earned but not yet received on U.S. government securities--other than bills--owned by the Federal Reserve or held under repurchase agreements, on loans to depository institutions, and on foreign currency investments. Interest is accrued daily.
Reserve Bank premises and operating equipment less allowances for depreciation, which state the value, at initial cost, of the land and buildings of the Reserve Banks and branches net an allowance for depreciation on buildings, including building-related machinery and equipment.
Also includes other accounts receivable.
Foreign currency denominated assets [row]:
Foreign currencies are revalued daily to reflect movements in market exchange rates each day. If the dollar depreciates relative to a foreign currency, the dollar value of the respective foreign currency denominated asset increases. On the other side of the balance sheet, the increase in value of the foreign currency denominated asset is reflected as an increase within the capital account. The capital account then declines in value while the Treasury's general account increases by the same amount, as the earnings are remitted to the U.S. Treasury by the Reserve Banks.
Conversely, if the dollar appreciates relative to a foreign currency, the dollar value of the respective foreign currency denominated asset decreases and ultimately results in a reduction in the U.S. Treasury's general account.
Since 1963, the Federal Reserve has occasionally agreed to warehouse foreign currency for the Treasury. In such transactions, the Federal Reserve takes the foreign currency from the Treasury in return for dollars provided to the Treasury. The Federal Reserve makes a spot purchase of the currency and protects the value of those currencies purchased by simultaneously selling the same amount of currencies forward at the same price to the Treasury.
When the Federal Reserve warehouses foreign currencies for the Treasury, both "Foreign currency denominated assets" and "U.S. Treasury, general account" increase in value at the time of the spot transaction. Both accounts decline when the forward transaction is completed or when currencies are withdrawn from the warehousing arrangement prior to maturity.
Gold stock [row]:
The gold stock of the United States is held by the Treasury and consists of gold that has been monetized: the Treasury has issued certificates reflecting the value of the gold to the Federal Reserve in return for a credit for the same dollar value to the Treasury's accounts. The gold stock also includes unmonetized gold, against which certificates have not been issued by the Treasury (although virtually all the Treasury's gold has been monetized since 1974).
The value of the gold stock is recorded on Federal Reserve and Treasury books at $42.22 per troy ounce, the so-called official U.S. government price established by international agreement and confirmed by Congress in 1973. If the Treasury buys or sells gold, however, the purchase or sale is executed at market prices.
Acquisition of gold, and its monetization by the Treasury, can affect reserve balances at depository institutions. Acquisition increases reserve balances. "Gold stock" and "Treasury cash holdings" rise, but the "U.S. Treasury, general account" balance falls. Monetization leaves the gold stock unchanged, but reduces Treasury cash holdings and increases the Treasury's general account. Monetization itself does not alter reserve balances, but these balances increase when the Treasury spends the proceeds or shifts the proceeds to the accounts that it maintains with depository institutions.
Special drawing rights certificate account [row]: Reserve Banks hold special drawing rights certificates (SDRs), an international monetary reserve asset created by the International Monetary Fund in 1970. Under the law providing for the United States' participation in the SDR system, the Secretary of the Treasury is authorized to issue SDR certificates, somewhat similar to gold certificates, to the Reserve Banks, which are required to purchase the SDRs for the purpose of financing SDR acquisitions or exchange stabilization operations. The value of the SDRs is established monthly, based on the exchange rates of a number of the underlying currencies.
Treasury currency outstanding [row]: Coin and paper currency (excluding Federal Reserve notes) held by the public, financial institutions, Reserve Banks, and the Treasury are liabilities of the U.S. Treasury. This item consists primarily of coin, but includes about a small amount of U.S. notes--that is, liabilities of the U.S. Treasury--that have been outstanding since the late 1970s. U.S. notes are no longer issued.
Total factors supplying reserve funds - sub-row of [row]: Total factors supplying reserve funds are the sum of "Reserve Bank credit," "gold stock," the "special drawing right certificate account," and "Treasury currency outstanding."