Friday, June 12, 2009

Fed’s balance sheet shrunk again in the latest week to $2.036 trillion from $2.062 trillion.

A Look Inside Fed’s Balance Sheet — 6/11/09 Update

The Fed’s balance sheet shrunk again in the latest week to $2.036 trillion from $2.062 trillion. Substantial increases in Treasurys holdings, agency debt and TALF lending were offset by a big drop in direct bank lending, which fell for the 12th time in 14 weeks. Central bank liquidity swaps and the central bank’s commercial paper facility also posted declines.

In an effort to track the Fed’s actions, Real Time Economics has created an interactive graphic that will mark the expansion of the central bank’s balance sheet. Every Thursday afternoon, the chart will be updated with the latest data released by the Fed.

In an effort to simplify the composition of the balance sheet, some elements have been consolidated. Portfolios holding assets from the Bear Stearns and AIG rescues have been put into one category, as have facilities aimed at supporting commercial paper and money markets. The direct bank lending group includes term auction credit, as well as loans extended through the discount window and similar programs.

Central bank liquidity swaps refer to Fed programs with foreign central banks that allow the institutions to lend out foreign currency to their local banks. Repurchase agreements are short-term temporary purchases of securities from banks, which are looking for liquidity and agree to repurchase them on a specified date at a specified price.

Click and drag your mouse to zoom in on the chart. Clicking the check mark on categories can add or remove elements from the balance sheet."

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