Surging Foreign Bank Reserves at New York Fed Won’t Alarm
This article is for subscribers only.
A thawing in dollar markets for European banks may be making it easier for the Federal Reserve to fund its balance sheet, which has ballooned to a record of more than $3 trillion.
Cash assets of international banks, which are largely bank reserves held at the Fed, have increased 27 percent since December, the month policy makers decided to quicken the pace of monthly bond purchases to $85 billion from $40 billion. The Fed finances the expansion of its portfolio through reserves, and the foreign portion of banks’ cash assets climbed to $881.6 billion for the week ending Feb. 20 from $694.9 billion on Dec. 26, Fed data show.