What Is the System Open Market Account?

The System Open Market Account (SOMA) is managed by the Federal Reserve Bank and contains assets acquired through operations in the open market. The assets in the SOMA serve as a management tool for the Federal Reserve's assets, a store of澳洲幸运5官方开奖结果体彩网: liquidity to be used in an emergency event where the need for liquidity arises and as 澳洲幸运5官方开奖结果体彩网:collateral for the liabilities on the Federal Reserve's balance she🔴et, such as U.S. dollars in circulation.

The SOMA assets include both domestic securities and foreign currency 澳洲幸运5官方开奖结果体彩网:portfolios of the Federal Reserve. The domestic portion is composed of U.S. dollar-denominated 澳洲幸运5官方开奖结果体彩网:Treasuries. The foreign currency portion is composed of a range of differ𝔍ent investments denominated in either euros or Japanese yen.

Understanding the System Open Market A𝄹ccount (SOMA)

System Open Market Account (SOMA) transactions are executed by the Open Market Desk of the 澳洲幸运5官方开奖结果体彩网:Federal Reserve Bank of New York, which is commonly referred to as the New York Fed. Policy decisions regarding such transactions are made by the Federal Reserve Open Market Committee (FOMC).

Conducting Monetary Policy

A primary responsibility of the Federal Reserve is to establish 澳洲幸运5官方开奖结果体彩网:monetary policy for the United States and to execute transactions to carry out that policy. When the Fed sets a target for the 澳洲幸运5官方开奖结果体彩网:Federal Funds Rate at which banks lend to each other, it executes purchases and sales of the securities in the SOMA to increase or decrease liquidity in the system. The Fed buys securities to add liqu♚idity to the system and sells securities to reduce liquidity.

Such transactions can be either outright purchases and sales, or short-term transactions that are known as 澳洲幸运5官方开奖结果体彩网:repurchase agreements (repos) and reverse repos. Repos and reverse repos are commonly done to adjust the amount of liquidity in the system, which changes daily due to commercial transactions, rather than to make a major liquidi♎ty adjustment due to a policy change.

Large-Scale Asset Purchase Program

The Fed has historically bought and sold short-term U.S. 澳洲幸运5官方开奖结果体彩网:Treasury bills to impact short-term interest rates. Between October 2008 and October 2014, in the aftermath of the financial market collapse, the Fed also purchased substantial amounts of long-term U.S. 澳洲幸运5官方开奖结果体彩网:Treasury bonds. The goal was to push long-term interest rates ൩lower and stimulate the U.S. economy.

The Fed also purchased large quantities of mortgage-based securities from government-sponsored entities 澳洲幸运5官方开奖结果体彩网:Fannie Mae, Freddie Mac, and 澳洲幸运5官方开奖结果体彩网:Ginnie Mae to support🐷 the housing market and increase funding for mortgage lending.

The Fed releases a weekly stat༒istical report known as H.4.1, which details♑ the balances it holds.

Fed Profit

The interest paid on the securities held in the SOMA provides the majority of the Fed's income. While the Fed sometimes makes money by buying and selling securities, those transactions are dictated by monetary policy requirements rather than potential trading gains.