As we all knowFederal ReserveIt is the central bank of the United States and has significant influence over the United States and the global economy. Recently, there have been ** reportsFederal ReserveThere have been huge losses, and as of November 22, the losses have reached $120.4 billion, equivalent to 860 billion yuanRMB。This has sparked a lot of confusion aboutFederal Reserveconcerns about the financial situation and possible bankruptcy issues. This article will uncover the answers to these two questions and discuss in detail the reasons that lead to losses.
First of all,Federal ReserveThe loss can be divided into two situations: actual loss and floating loss. Actual loss refers to cash outflow problems due to income being less than expenses. Federal ReserveThe income comes mainly from holdingsU.S. Treasuriesand interest income from mortgage-backed loans** (MBS). However, due toFederal ReserveThe vast majority of the bonds held are medium- to long-term bonds, whose interest rates have been set for many years and have remained low. At the same time, the United StatesCommercial BanksKeep your funds in:Federal ReserveAs a reserve,Federal ReserveNeed toCommercial BanksPay interest. Recently,Federal ReserveRaise multiple timesFederal** Interest Rate, leading to the nationFinancing costsRise rapidly,Commercial BanksThe interest rate on reserves has also increasedFederal Reserveinterest expense. Therefore,Federal ReserveThe actual loss was due to lower income and higher expenditure.
Secondly, the floating loss refers to:Federal ReserveHeldU.S. Treasuriesand losses arising from changes in the market capitalization of MBS with market fluctuations. In the market, the ** of a bond is inversely proportional to the yield, and when the yield rises, the ** of the bond falls. Federal ReserveThe large number of bonds it holds exposes it to the risk of floating losses due to market value fluctuations. It is worth noting that this floating loss will only be inFederal ReserveWhen you choose a bond, it becomes an actual loss and will not occur after the maturity of the holding. In addition,Federal ReserveIt also has the right to print money, and through the bonds and MBS it holds, it can obtain a steady stream of cash. Therefore, the floating loss will be on the contraryFederal Reservebut does not lead to the risk of bankruptcy.
So, why is there such a loss?On the one hand, it is due to the impact of interest rate hikes. The interest rate hike policy is byFederal Reservedecision, the recent interest rate hike measures have led toU.S. Treasuriesyields rise, thus thusFederal ReserveThe number of bonds held*** has increasedFederal Reserveof floating losses. On the other hand, it is due toFederal Reserveincreased expenditures. Due toFederal** Interest Rateof the ascent,Federal ReserveNeed to pay to:Commercial BanksInterest expense also increased, exacerbating the actual loss. The combination of these two factors leads to:Federal ReserveThe problem of losses.
However, there is no need to worry too muchFederal Reservebankruptcy issues. First of all, the floating loss pairFederal ReserveNot fatal. withCommercial BanksDifferent,Federal ReserveThere is no need to face the risk of a run, so even if there is a floating loss, it will not trigger systemic risk. Second, the interest rate hike policy is nearing its end, and interest expenses will gradually decrease in the future, thus alleviating the problem of actual losses. In addition,Federal ReserveAs the issuer of the US dollar, it has the issuanceCurrencyTherefore, even if the asset is seriously lost, cash can be obtained through ** bonds and MBS to avoid the risk of bankruptcy. Finally,Federal ReserveClosely related to the United States ** and the dollar,** will not be allowedFederal ReserveSomething unexpected happens, because it will have a serious impact on the US economy and the stability of the dollar.
In short, thoughFederal ReserveAt present, the loss is large, but its actual loss and floating loss will not lead to its bankruptcy, becauseFederal ReserveWith a range of countermeasures. In addition, as the interest rate hike policy gradually ends and interest expenses fall,Federal Reserve's financial situation is expected to improve gradually.