Research Topics in Focus

The SOMA in Perspective

The New York Fed's Research and Markets Groups recently teamed up on a five-part blog series covering the history and evolution of the Federal Reserve’s System Open Market Account (SOMA), a portfolio used to support implementation of monetary policy. The series, posted on Liberty Street Economics, was conceived to promote a better understanding of how the portfolio generates income, why income has increased in recent years, and why future net income from the portfolio will depend on a wide range of factors and may be more variable for a period of time.

Check out the Liberty Street Economics series:

The SOMA Portfolio through Time provides historical context on SOMA portfolio developments and the policy objectives it supports, noting that while the size and composition of the portfolio have played a more passive policy role in the years preceding the financial crisis, this hasn’t always been the case—historically or currently.

A History of SOMA Income describes how net income varies over time, and how the recent high remittances to Treasury shouldn’t be considered typical. The authors explain how changes in the size and composition of the SOMA portfolio were intended to promote the Fed’s dual mandate of maximum employment and price stability, and not to produce a financial return.

What If? A Counterfactual SOMA Portfolio compares the current SOMA portfolio with one in a counterfactual scenario in which the Fed responded to the financial crisis only by lowering the federal funds target rate and not expanding the size and composition of its balance sheet.

More Than Meets the Eye: Some Fiscal Implications of Monetary Policy casts the fiscal implications of monetary policy in a broad context. The authors encourage readers to consider all the ways that monetary policy influences the economy, and, by extension, the government’s tax revenues and expenditures—not just the more easily observable remittances to Treasury from the Federal Reserve.

Transparency and Sources of Information on the Federal Reserve’s Operations, Income, and Balance Sheet covers the various ways the public can access information on the Fed’s balance sheet, income, and operations.

See also an interactive chart showing SOMA holdings between 1914 and 2012:

The Fed’s SOMA Portfolio