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

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  • Andrew Foerster
  • Sylvain Leduc

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.

Suggested Citation

  • Andrew Foerster & Sylvain Leduc, 2019. "Why Is the Fed’s Balance Sheet Still So Big?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfel:00196
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    References listed on IDEAS

    as
    1. Jane E. Ihrig & Ellen E. Meade & Gretchen C. Weinbach, 2015. "Rewriting Monetary Policy 101: What's the Fed's Preferred Post-Crisis Approach to Raising Interest Rates?," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 177-198, Fall.
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