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Reserves at Fed Sink Below $3 Trillion to the Lowest Since 2020
The US banking system’s reserves, a key factor in the Federal Reserve’s decision to keep shrinking its balance sheet, tumbled below $3 trillion to the lowest since October 2020. Bank reserves fell by about $326 billion in the week through Jan. 1 to $2.89 trillion, according to Fed data released on Thursday. That’s the largest weekly slide in over two-and—a-half years. The decline comes as year-end dynamics force banks to pare balance-sheet intensive activities like repurchase agreement transactions in order to shore up their books for regulatory purposes. That means cash is directed to places like the central ... (full story)
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