Insights from MMF Portfolio Allocations amid Balance Sheet Normalization

Erik Bostrom

No 2025-03-03-2, FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)

Abstract: In June of 2022, the Federal Reserve (Fed) began to reduce its securities holdings and decrease the size of its balance sheet, a process known as balance sheet runoff. The decline in the Fed's assets mechanically results in a decline in Fed liabilities, and on net since June 2022, most of the decline in securities holdings has been associated with a decline in use of the Fed's overnight reverse repurchase (ON RRP) facility, a facility in which eligible counterparties are able to enter into an overnight reverse repo agreement with the Fed, earning the ON RRP rate on funds held at the facility.

Date: 2025-03-03
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2025-03-03-2

DOI: 10.17016/2380-7172.3709

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