U.S. Federal Reserve Overnight Reverse Repurchase Agreement Balance

The outstanding balance of the Federal Reserve's overnight reverse repurchase agreement (ON RRP) facility is the aggregate volume of overnight cash that eligible counterparties place at the Fed against Treasury securities as collateral. Eligible counterparties include money market mutual funds, government-sponsored enterprises, and primary dealers, with money market funds constituting the dominant share of participation.

Each dollar placed in the ON RRP reduces bank reserve balances dollar-for-dollar, since the counterparty's bank loses reserves as the cash moves from that bank onto the Fed's balance sheet.

A rising balance therefore indicates that cash is absorbed from the banking system into the Fed and that effective liquidity contracts, while a falling balance indicates that cash returns to private markets. Usage peaked at approximately USD 2.55 trillion in December 2022, when the elevated offering rate attracted massive inflows from money market funds unable to find private-market investments at comparable yields. The subsequent decline to near zero by mid-2024 reflects money market fund rotation into newly issued Treasury bills offering higher yields.

Computed from the Federal Reserve Bank of New York's daily open market operations data, where the ON RRP operates each day and the aggregate amount of overnight reverse repos accepted is published that afternoon. The data are already reported in billions of USD, requiring no unit conversion. The daily frequency distinguishes this series from the other three indicators of the U.S. liquidity framework (USFEDASSET, USFEDRSV, USTGA), which are reported as weekly H.4.1 series.

The ON RRP facility, established in September 2013 as a supplementary tool for monetary policy implementation, plays a central role in setting the effective lower bound of the federal funds rate target range by providing a risk-free overnight investment alternative at a fixed offering rate. Anderson and Kandrac (2018) examined the operational design of the ON RRP and showed that by offering a risk-free overnight investment at a fixed rate to a broad set of counterparties beyond just banks, the facility prevents short-term market rates from falling significantly below the target range, even when reserves are superabundant and banks have no incentive to bid for fed funds. Frost et al. (2015) analyzed the design considerations and potential financial stability implications of the ON RRP, concluding that while the facility enhances rate control, its large-scale use could facilitate rapid disintermediation of bank deposits during stress episodes.

The interaction between the ON RRP and the broader banking system reveals important structural features of the post-2008 monetary architecture. Martin, McAndrews, and Skeie (2016) showed that bank regulation, particularly the leverage ratio and liquidity coverage ratio, affects banks' willingness to intermediate in money markets, pushing money market funds toward the ON RRP as a substitute for bank deposits and repo transactions. Armenter and Lester (2017) developed a model of excess reserves and the ON RRP that demonstrates how the facility creates a two-tiered floor system, with IORB establishing the rate for banks and the ON RRP rate establishing the rate for non-bank counterparties.

The ON RRP also has implications for collateral markets and the availability of safe assets. Williamson (2016) analyzed the role of scarce collateral in monetary policy implementation and showed that the ON RRP, by temporarily returning Treasury securities to private markets overnight, can alleviate collateral scarcity that would otherwise depress repo rates below the policy target. The rapid drawdown of the ON RRP facility during 2023–2024 represented a reverse flow, with money market funds withdrawing cash from the Fed and deploying it into Treasury bills, effectively substituting private-market safe assets for the overnight collateral swap provided by the facility.

For money-market fund managers and short-term fixed-income investors, the ON RRP balance serves as a real-time indicator of the relative attractiveness of the Fed's overnight offering rate versus private-market alternatives. Pozsar (2022) argued that the ON RRP balance functions as a barometer of money-market plumbing, with rising balances indicating that private-market rates have compressed below the Fed's offering rate and declining balances signaling that Treasury bill supply or other market opportunities have drawn cash out of the facility.

The ON RRP's role as a liquidity buffer has significant implications for the pace and consequences of quantitative tightening. Copeland, Martin, and Walker (2014) demonstrated that the distribution of cash across the financial system, including the portion parked at the Fed through the ON RRP, determines the effective tightness of funding conditions independent of the aggregate reserve level. As the ON RRP balance declined from its 2022 peak, the cash that flowed out was absorbed primarily by Treasury bill issuance rather than returning to bank reserves, implying that the decline in ON RRP usage cushioned the reserve-draining impact of QT.

Shifts in the ON RRP balance propagate to money creation and risk-taking incentives across the shadow banking system. Sunderam (2015) showed that money creation in the shadow banking system responds endogenously to the availability of safe short-term assets. When the ON RRP balance is large, money market funds are effectively choosing the Fed's facility over private-market lending, constraining the supply of short-term funding available to broker-dealers and other shadow-banking intermediaries. Stein (2012) analyzed monetary policy as financial stability regulation and argued that the central bank's administered rates, including the ON RRP offering rate, shape risk-taking incentives across the financial system by determining the opportunity cost of safe overnight investment. Krishnamurthy, Nagel, and Orlov (2014) provided complementary evidence by documenting how the supply of safe assets in repo markets affects intermediary leverage and risk-taking, suggesting that large ON RRP balances may reduce systemic risk by absorbing cash that would otherwise fund leveraged positions.

Over 6089 observations from 2003-02-07 to 2026-06-10, the Federal Reserve overnight reverse-repo balance is integrated of order one on the level, with the Dickey and Fuller (1979) test in the Said and Dickey (1984) form not rejecting at p = 0.9064, the Phillips and Perron (1988) test concurring at p = 0.9268, and the Kwiatkowski et al. (1992) test rejecting stationarity. On the first difference the Ljung and Box (1978) portmanteau rejects white noise at lags 10 and 20, Q = 283.01 and Q = 439.16 at p = 0.000 and p = 0.000. The Bai and Perron (1998, 2003) procedure finds no break in the mean, a reading consistent with the parameter-instability inference of Andrews (1993) on the differenced object (Perron 1989).

This Federal Reserve aggregate is released on a high-frequency reporting cadence with no low-integer seasonal period, so the seasonal machinery of Hylleberg et al. (1990) and Canova and Hansen (1995) carries no meaningful object and is not run (Beaulieu and Miron 1992; Ghysels and Osborn 2001).