New Reading Resource: The Fed’s Balance Sheet

Explain to students how the Federal Reserve uses its balance sheet in a sustainable ample-reserves regime. This framework (1) enables effective influence of short-term interest rates through the Fed’s administered rates and (2) accommodates the natural fluctuations in currency and Treasury account balances that move reserve balances without requiring daily market operations.

The reading outlines how the Fed’s balance sheet is divided into assets that the central bank holds like securities and its liabilities including the U.S. Treasury General Account—which acts as the checking account for the federal government.  As the Fed adjusts its assets it must also manage the shifting of liabilities as banks and the government move money in and out of accounts held with the central bank.

Through the use of illustrations and FRED® data series, the article provides students with a complete picture of how the Federal Reserve handles its portfolio to maintain steady monetary policy.

By creating a free account on fre.org, this article can be easily assigned to your students using Canvas, Google Classroom, Schoology, Blackboard, and D2L Brightspace. The assignment contains a self-grading, multiple-choice assessment for the convenience of both teachers and students. This tutorial will help you get started.  
 
Check out the full resource page below!