Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189874 
Year of Publication: 
2018
Series/Report no.: 
Staff Report No. 833
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
The paper surveys the recent literature on the fiscal implications of central bank balance sheets, with a special focus on political economy issues. It then presents the results of simulations that describe the effects of different scenarios for the Federal Reserve's longer-run balance sheet on its earnings remittances to the U.S. Treasury and, more broadly, on the government's overall fiscal position. We find that reducing longer-run reserve balances from $2.3 trillion (roughly the current amount) to $1 trillion reduces the likelihood of posting a quarterly net loss in the future from 30 percent to under 5 percent. Further reducing longer-run reserve balances from $1 trillion to pre-crisis levels has little effect on the likelihood of net losses.
Subjects: 
central bank balance sheets
monetary policy
remittances
JEL: 
E58
E59
E69
Document Type: 
Working Paper

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