03-28-2020

Coronavirus stimulus just pushed Fed’s balance sheet past $5 trillion for the first time ever


  • The Federal Reserve balance sheet is now at $5.3 trillion, up 12.4% over just the last week.
  • The central bank is greatly increasing the amount of Treasurys and other assets it owns in an effort to keep markets and the economy afloat during the financial crisis.
  • Proportionately, the biggest increase in the holdings came in the dollar swaps lines it has with other central banks.

Though the Federal Reserve’s efforts to keep markets running and boost the economy are just getting into gear, its asset portfolio has reached levels never seen before.

The central bank’s balance sheet, which consists largely of bonds and other assets it has purchased over the years, ballooned to $5.3 trillion for the week ending Wednesday. That’s well above the $4.52 trillion peak it hit in mid-May 2016, before the Fed started rolling off the bonds it had acquired during and after the Great Recession.

This latest peak has occurred in rapid fashion, the result of expansion begun in small steps earlier this year and then accelerated with the growth of the coronavirus crisis.

Just over the past week, the increase was 12.4%, partly a function of the Fed adding $255 billion in Treasury securities plus $19 billion in mortgage-backed securities as the Fed has entered into another round of quantitative easing. The biggest growth area proportionately, though, was in central bank currency swaps, which rose from just $25.2 billion a week ago to $206.1 billion in the latest reporting.

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Author: Monetary Gold