PostsPosts

• 2/4/2022

This is the second part of an article that describes how banks have accommodated the very large involuntary increase in their Fed reserve balances that corresponds to Fed asset purchases. In this post, I show that banks increased their deposit funding substantially, allowing them to reduce nondeposit borrowings. “Core” deposits—deposits excluding large time deposits—also increased significantly, offset, in part, by a decline in large time deposits, which are deposits above $100,000. Concurrently, equity financing declined as a share of assets. I conclude that Fed asset purchases are not responsible directly for the surge in deposits and reduction in other liabilities and equities. Rather, both Fed and bank portfolio shifts are responses to heightened economic stress and uncertainty.

• 2/4/2022

The Federal Reserve’s acquisition of $4.4 trillion of bonds since February 2020 more than doubled the size of its balance sheet. Meanwhile, commercial banks’ balance sheets expanded by about $4.2 trillion in aggregate. Despite similar expansions, links between the Fed’s and the banking system’s balance sheets are complex.

• 1/18/2022

On December 1, 2021, the Federal Reserve finalized changes to the FR 2052a (6G) report effective May 1, 2022, for banking organizations subject to Category I standards and October 1, 2022, for banking organizations subject to Category II–IV standards.  The Federal Register Notice can be found here.

An informational Ask the Fed^® session on Thursday, January 27, 2022, will walk through the technical documentation and XML schema intended to assist firms in developing data files to ensure successful transmission to the Federal Reserve Bank.  The final instructions, the XML schema that implements these instructions, supporting technical documentation, sample XML files and other supporting materials can be found below. 

• 12/29/2021

Financial technology, or fintech, is changing how consumers and businesses bank. While digital banking options like mobile check deposit and automatic bill payment have been available for about 20 years, other services made possible by fintech—such as digital wallets and person-to-person payments—are relatively recent and are increasingly being adopted by banks of all sizes. Thus far most banks, especially community banks, have opted to partner with fintech firms to provide these services to their customers.

• 12/9/2021

The vast majority of commercial banks that have ever operated in the U.S. have disappeared. Since its all-time high of 30,456 in 1921, the bank population had declined to only 4,377 at the end of 2020, a decline of about 86%. Even since 1934, after the 1933 bank holiday closed thousands of banks and the newly established Federal Deposit Insurance Corporation (FDIC) stabilized the banking system, the bank population has declined by 71%, or 10,973 institutions.