Reserve balances held at the Fed, optionally scaled by nominal GDP or Fedwire payments volume. The raw level means little on its own — the economy and payment volumes keep growing — so these ratios are the practical yardsticks for how far QT can run before reserves slip from "ample" toward "scarce."
This view presents reserve balances with Federal Reserve Banks, optionally adjusted by Nominal GDP or Fedwire Funds Service transaction volume. Use the date range and the adjustment selector to view ratios relative to broader activity measures. In the Fed’s framework, “ample reserves” is a regime in which the federal funds rate can be controlled within its target range without active day‑to‑day reserve management. As transaction volumes (proxied by nominal GDP and Fedwire volume) rise, the likelihood that some banks become short of reserves increases, which can push up interbank funding rates. A recent Fed staff note, What can public Fedwire payments data tell us about ample reserves?, suggests that a reserves‑to‑Fedwire‑volume ratio around 0.65 may be indicative of “ample reserves.” Some practitioners also consider a reserves‑to‑nominal‑GDP ratio above ~0.10 as a useful signal. These thresholds are uncertain and historically inferred; they should be used alongside other indicators, such as the behavior of short‑term interest rates.
Why it matters: The banking system's "lowest comfortable level of reserves" (LCLoR) is unobservable in advance — it can only be inferred from market behavior, which is what these ratios are for. Where QT's drain lands depends on who absorbs the Treasury's new issuance: as long as bills yield more than the ON RRP rate, money funds have the incentive to surrender RRP balances to buy them and bank reserves are spared; once that buffer is gone, further runoff comes straight out of reserves. As reserves approach the LCLoR, repo rates start misbehaving (SOFR's right tail widens, EFFR drifts up). In September 2019 the repo market seized up when reserves-to-GDP fell below roughly 7%; this cycle's threshold is widely assumed to sit higher — after the experiences of 2019 and March 2023, banks' internal liquidity management has shifted toward holding larger reserve buffers, reserves being the one asset that settles obligations instantly without having to be sold into a market. The reading order: check whether the ON RRP is drained, then these ratios, then confirm against the behavior of short-term rates.