Bank Reserves Held at the Federal Reserve
Reserves are the most liquid asset a bank holds. Their direction is the clearest mechanical read on whether quantitative policy is adding or draining liquidity.
History
What reserve balances are
["When the Federal Reserve buys a security, it credits the seller's bank with a deposit at the Fed. That deposit is a reserve balance — central bank money, held electronically, available to settle payments between banks.
", 'The H.4.1 release reports the total weekly. Before 2008 the number was small, a few tens of billions. Quantitative easing turned it into trillions, which is why the series looks like a step function rather than a market price.
']Why the level matters less than the direction
['Reserves are not a constraint on lending in the current framework — banks are not reserve constrained when reserves are abundant. What moves markets is the change: reserves falling means the Fed is draining, whether through runoff, reverse repos or a Treasury General Account build.
', 'Watch the composition too. Reserves can fall while the Fed does nothing if the Treasury rebuilds its cash balance at the Fed, because both are liabilities of the same balance sheet. That is a liquidity drain without a policy change, and it has caused real funding stress.
']The 2020–2023 round trip
['Reserves went from roughly $1.5 trillion before the pandemic to over $4 trillion at the 2021 peak, then declined as the Fed ran off its balance sheet and the reverse repo facility absorbed cash. Each leg of that round trip coincided with a change in the liquidity backdrop for risk assets.
', "The floor matters. Reserves cannot fall indefinitely without money markets tightening; the September 2019 repo spike is the reference case for what happens when they get too low relative to the banking system's demand.
"]How we calculate it
['We publish WRESBAL from FRED, converted from millions to trillions of dollars, weekly, as reported in the H.4.1 release on Thursday afternoons for the week ending the prior Wednesday.
', "The percentile is the share of weekly observations since December 2002 below today's level. Because the series is dominated by the QE expansions, the percentile is mostly a statement about where we are in the current cycle.
"]Distribution since 2002
Each row is the share of historical observations at or below that level. A reading in the 90th percentile is higher than nine tenths of the record.
Important
Not investment advice. This page is published for information and education only. It is not a recommendation, solicitation, or offer to buy or sell any security. Market data may be delayed, incomplete, or revised. Indicators describe the past; they do not forecast returns. Past performance does not guarantee future results. Do your own research or consult a licensed financial professional before acting on anything you read here.
Questions
Are reserves the same as the money supply?
No. Reserves are central bank money held by banks; M2 is mostly deposits held by households and businesses. Reserves can rise while M2 falls, and the reverse.
Why is the series weekly?
The H.4.1 balance sheet release is weekly. There is no daily public equivalent.
What does "reserve scarcity" mean?
When reserves fall close to the level banks need for settlement, overnight funding rates become volatile. That is the constraint worth watching, not the absolute level.
Why is the latest stretch of the chart locked?
The current reading and the full history are free. The most recent weeks are member-only.