In 2023, the Federal Reserve recorded the largest operating loss in its 110-year history, and was unable to return almost anything to the treasury as it is supposed to do when it achieves profits.
According to preliminary estimates by the US Central Bank, The loss amounted to $114.3 billion in 2023, compared to a profit of $58.8 billion in 2022.
This loss is associated with:
- The increase in interest rates that the Federal Reserve used to limit high inflation forced it to pay more money in exchange for bank reserves, in addition to the Treasury bonds and mortgage-backed stocks that it holds, and thus the Federal Reserve paid $ 281.1 billion in interest in 2023, an increase of 178.7 billion dollars in interest. One billion for the year 2022.
- One source of the Fed’s income declined last year: the interest it earns from the bonds and stocks it holds.
After heavy purchases during the “Covid-19” crisis to support the American economy, the Federal Reserve is currently reducing its portfolio.
As his portfolio’s returns deteriorated, he received only $163.8 billion in interest in 2023, $6.2 billion less than the previous year.
In normal times, the Federal Reserve pays to the Treasury every week all of its profits after deducting its needs for the costs of operating its headquarters in Washington and the profits paid to its 12 subsidiary banks in the states, which make up the Federal Reserve System.
But when profits are not enough to cover these costs, the Federal Reserve becomes indebted to the Ministry of Economy and Finance and is counted as deferred assets.
The Federal Reserve will not resume paying money to the Treasury until it achieves a profit that allows it to cover this amount.
In 2023, the US Federal Reserve was unable to send more than $670 million to the Treasury, while the value of its deferred assets amounted to $116.4 billion, to which $16.6 billion was added from 2022, bringing the total to $133 billion.
In 2022, the Federal Reserve was able to pay $76 billion to the treasury, because it achieved a profit until September of the same year.
