Board of Governors of the Federal Reserve System

The Federal Reserve System on Friday released the 2017 combined annual audited financial statements for the Federal Reserve Banks, as well as statements for the 12 individual Federal Reserve Banks and the Board of Governors. An independent public accounting firm engaged by the Board has issued unqualified opinions on the financial statements and on the Board's and the Bank's internal controls over financial reporting.

The Federal Reserve Banks' 2017 earnings were approximately $80.7 billion. The Reserve Banks provided for remittances to the U.S. Treasury of $80.6 billion in 2017. Interest income on securities acquired through open market operations totaled $113.6 billion, an increase of $2.5 billion from the previous year. Interest expense on depository institutions' reserve balances and term deposits during the year was $25.8 billion, an increase of $13.8 billion from the previous year. Interest expense on securities sold under agreements to repurchase was $3.4 billion, an increase of $2.2 billion from the previous year. Gains from the daily revaluation of foreign currency denominated investments were $1.9 billion. Reserve Bank operating expenses were $6.8 billion, including assessments of $2 billion for Board expenses, currency costs, and the operations of the Bureau of Consumer Financial Protection.

The audited financial statements provide a significant amount of information about the assets, liabilities, and earnings of the Reserve Banks and the Board as of December 31, 2017, including information about the composition, fair value, and earnings related to the $4.4 trillion of U.S. Treasury securities, government-sponsored enterprise (GSE) debt securities, and federal

agency and GSE mortgage-backed securities acquired through open market operations. The Federal Reserve Bank of New York provides additional detailed information about open market operations and securities holdings on an ongoing basis on its website at www.newyorkfed.org/markets/pomo_landing.html. Total Reserve Bank assets as of December 31, 2017, were approximately $4.4 trillion, which was similar to the balance on December 31, 2016.

The Board engages KPMG LLP, an independent public accounting firm, to conduct annual audits of these financial statements in accordance with auditing standards issued by the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, and, for the Board of Governors audit only, the Generally Accepted Government Auditing Standards. The public accounting firm also conducts audits of internal controls over financial reporting for the 12 individual Federal Reserve Banks and the Board of Governors. The Federal Reserve is unique among large central banks in requesting an external audit of its internal controls over financial reporting.

The Federal Reserve System financial statements are available on the Federal Reserve Board's website at www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm.

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