The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest *** trillion U.S. dollars at the end of 2007, it ballooned to approximately **** trillion U.S. dollars by June 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic - both of which resulted in negative annual GDP growth in the U.S. - showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached ***** percent in 2022, the highest since 1991. However, by *************, inflation had declined to *** percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at **** percent in ***********, before the first rate cut since ************** occurred in **************. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2023, the Fed reported a negative net income of ***** billion U.S. dollars, a stark contrast to the ***** billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over *** billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of ****** billion U.S. dollars in the same year.

The Federal Reserve's net interest income on securities acquired through open market operations totaled ****** billion U.S. dollars in 2023, marking an increase of approximately four billion U.S. dollars compared to the previous year. This was the highest interest income reported during the observed period. The net interest income of FDIC-insured commercial banks also reached a peak in 2023.

Graph and download economic data for Reserves of Depository Institutions: Total (TOTRESNS) from Jan 1959 to Jun 2025 about adjusted, reserves, and USA.

This item includes other Federal Reserve assets and non-float-related as-of adjustments. In addition to the as-of adjustments, there are many components in this category, including the following major items:

Assets denominated in foreign currencies: Foreign currencies are revalued to reflect movements in market exchange rates each day. If, in the revaluation, the value of the currency increases, then other Federal Reserve assets increase. On the other side of the balance sheet, "Other liabilities and capital" increase because the increase in value of the currency becomes earnings, which are reflected in the earnings category within the capital account. Other liabilities and capital decline in value as the earnings are removed from this category and the U.S. Treasury's general account increases because the funds are remitted to this account at the Reserve Banks. Since 1963, the Federal Reserve has occasionally agreed to warehouse foreign currency for the Treasury. In such transactions, the Federal Reserve takes the foreign currency from the Treasury in return for dollars provided to the Treasury. The Federal Reserve makes a spot purchase of the currency and protects the value of those currencies purchased by simultaneously selling the same amount of currencies forward at the same price to the Treasury.

When the Federal Reserve warehouses foreign currencies for the Treasury, both "other Federal Reserve assets" and "U.S. Treasury, general account" increase in value at the time of the spot transaction. Both accounts decline when the forward transaction is completed or when currencies are withdrawn from the warehousing arrangement prior to maturity.

Premiums paid on securities bought: This release reports Federal Reserve holdings of securities at face value, not necessarily at market value. If the Federal Reserve pays more than the face value for securities it purchased, the premiums over the face value are amortized as the securities mature. Part of the premium is transferred daily to the earnings category as a "negative earning." As the premium in "Other Federal Reserve assets" is reduced, a simultaneous balancing reduction is made in "Other liabilities and capital." Securities purchased at a premium over face value are accounted for in this way because, at maturity, the Federal Reserve Banks receive only the face amount of the securities, not the amount actually paid. The premiums paid on securities bought under repurchase agreements, though, are not amortized. These premiums are, in effect, returned to the Federal Reserve Banks when the securities are repurchased by the dealer, since the negotiated price in the original transaction reflects the premiums.

Accrued interest and other accounts receivable: This item represents the daily accumulation of interest earned on U.S. government securities--other than bills--owned by the Federal Reserve or held under repurchase agreements, on loans to depository institutions, and on foreign currency investments. Interest is accrued daily. Reserve Bank premises and operating equipment less allowances for depreciation: This item states the value, at initial cost, of the land and buildings of the Reserve Banks and branches less an allowance for depreciation on buildings, including building-related machinery and equipment.

Between 2013 and 2023, the Federal Reserve's earnings remittances to the United States Department of the Treasury experienced significant fluctuations. The remittances reached their highest point in 2015. However, in 2023, these remittances took an unprecedented turn, amounting to approximately negative *** billion U.S. dollars - a dramatic decrease compared to previous years. The unusual situation of negative earnings remittances typically occurs during periods of rapidly rising interest rates. As the Fed increases interest rates to combat inflation, it pays higher interest on reserves held by commercial banks. Simultaneously, the value of its bond holdings may decrease, potentially leading to unrealized losses. When these costs surpass the Fed's income from its assets, it results in negative earnings, effectively creating a deferred asset rather than making a payment to the Treasury.

Graph and download economic data for Total Revenue for Commercial Banking, All Establishments, Employer Firms (REVEF52211ALLEST) from 2009 to 2022 about employer firms, accounting, revenue, establishments, commercial, services, banks, depository institutions, and USA.

Graph and download economic data for Demand Deposits (DEMDEPSL) from Jan 1959 to Jun 2025 about deposits, commercial, banks, depository institutions, and USA.

The U.S. federal funds rate peaked in 2023 at its highest level since the 2007-08 financial crisis, reaching 5.33 percent by December 2023. A significant shift in monetary policy occurred in the second half of 2024, with the Federal Reserve implementing regular rate cuts. By December 2024, the rate had declined to 4.48 percent. What is a central bank rate? The federal funds rate determines the cost of overnight borrowing between banks, allowing them to maintain necessary cash reserves and ensure financial system liquidity. When this rate rises, banks become more inclined to hold rather than lend money, reducing the money supply. While this decreased lending slows economic activity, it helps control inflation by limiting the circulation of money in the economy. Historic perspective The federal funds rate historically follows cyclical patterns, falling during recessions and gradually rising during economic recoveries. Some central banks, notably the European Central Bank, went beyond traditional monetary policy by implementing both aggressive asset purchases and negative interest rates.

Calculated as the ratio of quarterly nominal GDP (GDP (https://fred.stlouisfed.org/series/GDP)) to the quarterly average of M1 money stock (M1SL (https://fred.stlouisfed.org/series/M1SL))

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.

The frequency of currency exchange can be used to determine the velocity of a given component of the money supply, providing some insight into whether consumers and businesses are saving or spending their money. There are several components of the money supply,: M1, M2, and MZM (M3 is no longer tracked by the Federal Reserve); these components are arranged on a spectrum of narrowest to broadest. Consider M1, the narrowest component. M1 is the money supply of currency in circulation (notes and coins, demand deposits, and other liquid deposits). A decreasing velocity of M1 might indicate fewer short- term consumption transactions are taking place. We can think of shorter- term transactions as consumption we might make on an everyday basis.

Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately. For more information on the H.6 release changes and the regulatory amendment that led to the creation of the other liquid deposits component and its inclusion in the M1 monetary aggregate, see the H.6 announcements (https://www.federalreserve.gov/feeds/h6.html) and Technical Q&As (https://www.federalreserve.gov/releases/h6/h6_technical_qa.htm) posted on December 17, 2020.

The broader M2 component includes M1 in addition to saving deposits, certificates of deposit (less than $100,000), and money market deposits for individuals. Comparing the velocities of M1 and M2 provides some insight into how quickly the economy is spending and how quickly it is saving.

MZM (money with zero maturity) is the broadest component and consists of the supply of financial assets redeemable at par on demand: notes and coins in circulation, traveler’s checks (non-bank issuers), demand deposits, other checkable deposits, savings deposits, and all money market funds. The velocity of MZM helps determine how often financial assets are switching hands within the economy.

The USCC-2 - Amounts Outstanding and in Circulation table provides a description of the various issues of paper money by denomination. Partial notes represents value of certain partial denominations not presented for redemption. It also gives an estimated average of currency and coin held by each individual, using estimates of population from the Bureau of the Census. The USCC comes from monthly reports compiled by Treasury offices, U.S. Mint offices, the Federal Reserve banks (FRBs), and the Federal Reserve Board.

Access to credit refers to the borrowing capacity advanced by a commercial bank to an individual, firm or organization in the form of loans, cash credit and overdrafts. Credit enables households to borrow against future income and firms to invest in machinery and equipment. The data for this report is measured as the value of the loans and leases in bank credit, and it is sourced from the Federal Reserve. The values presented in this report are annual figures, derived from equally weighted monthly averages of the loans and leases in commercial bank credit. This data includes commercial and industrial loans, real estate loans and consumer loans. However, the data excludes unearned income, federal funds borrowing and reverse repurchase agreements, as well as loans made to commercial banks. The data is not seasonally adjusted and forecasts are based on IBISWorld analysis.

The U.S. M1 money supply reached ***** trillion dollars in 2024, showing a modest increase from the previous year. While M1 grew gradually between 2000 and 2019, it experienced an unprecedented surge in 2020 due to the Federal Reserve's quantitative easing response to the COVID-19 pandemic. The most dramatic spike occurred in May 2020, when M1 jumped from *** to **** trillion dollars - more than tripling in a single month.

In June 2024, the European Central Bank (ECB) began reducing its fixed interest rate for the first time since 2016, implementing a series of cuts. The rate decreased from 4.5 percent to 3.15 percent by year-end: a 0.25 percentage point cut in June, followed by additional reductions in September, October, and December. The central bank implemented other cuts in early 2025, setting the rate at 2.4 percent in April 2025. This marked a significant shift from the previous rate hike cycle, which began in July 2022 when the ECB raised rates to 0.5 percent and subsequently increased them almost monthly, reaching 4.5 percent by December 2023 - the highest level since the 2007-2008 global financial crisis. How does this ensure liquidity? Banks typically hold only a fraction of their capital in cash, measured by metrics like the Tier 1 capital ratio. Since this ratio is low, banks prefer to allocate most of their capital to revenue-generating loans. When their cash reserves fall too low, banks borrow from the ECB to cover short-term liquidity needs. On the other hand, commercial banks can also deposit excess funds with the ECB at a lower interest rate. Reasons for fluctuations
The ECB’s primary mandate is to maintain price stability. The Euro area inflation rate is, in theory, the key indicator guiding the ECB's actions. When the fixed interest rate is lower, commercial banks are more likely to borrow from the ECB, increasing the money supply and, in turn, driving inflation higher. When inflation rises, the ECB increases the fixed interest rate, which slows borrowing and helps to reduce inflation.

Graph and download economic data for Commercial Banks in the U.S. (DISCONTINUED) (USNUM) from Q1 1984 to Q3 2020 about commercial, banks, depository institutions, and USA.

Macroeconomic improvements and greater acceptance of reward programs have driven growth for card reward program services. Over the past five years, consumers' willingness to accrue higher levels of debt led to increased demand for operators' complementary services. In addition, consumers have maintained a taste for rewards program services, while both national and local retailers have increased their card-linked marketing efforts. In addition, the economic recovery following volatility experienced at the onset of the period, coupled with rising aggregate household debt and corporate profit has enabled consumers' ability to manage credit card debt causing revenue to grow at a CAGR of 2.4% to $952.0 million over the past five years to 2024, including an expected increase of 1.1% in 2025 alone. The recent rate cuts have also contributed to increased consumer spending, positively influencing operators' profits. In 2025, profit measured as earnings before interest and taxes, is expected to account for 19.6% of revenue. Rising aggregate household debt levels have benefited operators. According to the Federal Reserve, aggregate household debt levels have increased from $15.6 trillion in 2020 to an estimated $16.1 trillion in 2025, as consumers have displayed confidence in their financials and have been willing to take on higher levels of debt amid macroeconomic growth. This trend was accelerated by high inflation, which exacerbated costs for consumers and forced many customers to purchase items via credit in an attempt to preserve their fiscal stability. Consumer spending has also grown at a CAGR of 3.4%. According to the latest data available from the Federal Reserve, domestic consumer credit and credit card balances have also increased. Over the next five years, revenue is expected to grow at a CAGR of 1.8% to $1.0 billion. Continued improvements in key macroeconomic variables and acceptance among downstream markets are expected to contribute to this growth, especially as the economy is expected to continue growing and lingering inflationary challenges are eased. Operators will contend with a massive level of competition, primarily from credit card issuers and banks that develop and maintain internal card reward programs. Credit card issuers will focus on wealthier consumers who tend to spend more on their cards, the anticipated growth in households earning more than $100,000 is forecast to boost revenue growth possibilities moving forward.

Graph and download economic data for Use of Financial Services, Mobile Banking: Active Number of Mobile Money Accounts for South Africa (ZAFFCMAANUM) from 2013 to 2023 about South Africa, financial, services, banks, and depository institutions.