Fed balance sheet tops $5 trillion for first time

WASHINGTON: The US Federal Reserve’s balance sheet soared past $5 trillion in assets for the first time this week as it scooped up bonds and extended loans to banks, mutual funds and other central banks in its unprecedented effort to backstop the economy in the face of the global coronavirus pandemic.

The Fed’s total balance sheet size exploded by more than half a trillion dollars in a single week, roughly twice the pace of the next-largest weekly expansion in the financial crisis in October 2008. As of Wednesday, the Fed’s stash of assets totaled $5.3 trillion, according to data.

The Fed bought $355 billion of Treasuries and mortgage-backed bonds in the last week in what is now an openended commitment to stabilize financial markets rocked by the outbreak and the halt in economic activity that has come in its wake.

It also offered more than $200 billion in credit through socalled foreign currency swap lines to other central banks to allow them to pump muchneeded greenbacks into their jurisdictions to help foreign borrowers stay current with their dollar-denominated liabilities.

The snapshot of the Fed’s balance sheet also showed sizable demand for a pair of brand new liquidity facilities aimed at stabilizing money markets and supporting primary dealers, the banks that transact directly with the central bank.

The new Primary Dealer Credit Facility had been tapped for $27.7 billion in loans, while the Money Market Mutual Fund Liquidity Facility had borrowings of $30.6 billion.