The Fed’s main liquidity sources are bank reserves and reverse repo facility inflows, which allow the Fed to store cash on its books.

As of Wednesday, bank reserves were $3.3 trillion, down $1 trillion from 2021.

Reverse repo daily outstanding fell from about $2 trillion between June 2022 and June this year to $1.5 trillion.

Former St. Louis Fed president James Bullard expressed concern about the Fed’s losses and suggested keeping some of the $1 trillion it has paid the Treasury over the last decade to offset its losses.