Why Is the Fed’s Balance Sheet Still So Big?

Andrew Foerster and Sylvain Leduc

FRBSF Economic Letter, 2019

Abstract: The Federal Reserve?s balance sheet is significantly larger today than it was before the financial crisis of 2008?2009. Rising demand for currency due to greater economic activity is partly responsible for this increase. The balance sheet will also need to remain large because the Federal Reserve now implements monetary policy in a regime of ample reserves, using a different set of tools than in the past to achieve its interest rate target.

Date: 2019
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