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Comment: Federal Reserve Remittances to US Treasury in 2018 decline from 2017

On January 10, the Federal Reserve announced preliminary numbers on its remittances to Treasury for 2018.

The combination of reduced holdings of securities and rising interest rates means that for a third year in a row, remittances to the Treasury are declining, although they remain significant.

For 2018, the preliminary number is $65.4 billion, or remittances of $62.2 billion and including $3.2 billion in lump-sum payments required to reduce the aggregate Reserve Bank capital surplus to $6.825 billion per the Bipartisan Budget Act of 2018 and the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final accounting is expected in March after a routine audit.

Net income for the Fed was mainly from $112.3 billion in interest income on securities held with interest expense of $38.5 billion paid on reserve balance held by depository institutions and incurred interest expense of $4.6 billion on securities sold under repurchase agreements.

The decrease from 2017 was $17.6 billion, “primarily attributable to an increase of $12.6 billion in interest expense associated with reserve balances held by depository institutions.”

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