The Central Bank Balance Sheet indicates the amount of cash circulating in the economy and the amount of money available for loans. When its balance sheet is increasing, the Central Bank is trying to grow the economy by adding more liquidity that will lead to more loans and more economic activity. When its balance sheet is decreasing, the Central Bank is trying to moderate growth and slow spending. In the US, assets on the balance sheet are primarily US Treasury notes and bonds, and mortgage-backed securities such as mortgage loans guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Liabilities are commonly the amount of currency in circulation, bank reserves deposited by member banks into Federal accounts, and reverse repurchase agreements which represent overnight loans from member banks to the Central Bank.
