The Fed's balance sheet is $2.235 trillion smaller than its 2022 peak — and bank reserves absorbed less than half the drop. The reverse-repo liability line gave up the most, $1.714 trillion, and the overnight facility inside it has drained to $175 million

Every Thursday the Federal Reserve publishes its balance sheet — form H.4.1, down to the million. It is the ledger behind quantitative tightening: since 2022 the Fed has let bonds mature without replacing them, shrinking the balance sheet it had ballooned during the pandemic. Total assets peaked at $8.965 trillion on April 13, 2022. The Fed began the runoff that June and concluded it on Dec. 1, 2025. As of the Aug. 26, 2026 release, assets stand at $6.731 trillion — $2.235 trillion below the peak. A central bank's assets equal its liabilities, so every dollar that leaves the asset side has to come out of one of the accounts on the other. We read all 229 weekly releases since the peak and reconciled that other side, aligning the Aug. 26 release with the peak week. Of the $2.235 trillion decline: the reverse-repo liability line fell $1.714 trillion — 77% of the drop; bank reserves fell $899 billion — 40%, less than half the balance-sheet decline; the Treasury's cash account rose $403 billion; currency in circulation rose $206 billion; and other liabilities and capital account for a $231 billion residual. Those shares do not sum to the whole, because two lines grew: the Treasury's balance and currency both rose — each of which drains reserves on its own — so the reverse-repo decline more than offset those increases while reserve balances fell by $899 billion. Most of that reverse-repo drawdown was the overnight facility, where money-market funds park spare cash at the Fed. On its own daily series it peaked at $2.554 trillion on Dec. 30, 2022, slipped below $1 trillion in November 2023, below $100 billion in December 2024, and sat at $175 million on Aug. 28, 2026 — effectively empty. The two measures are not identical: the $1.714 trillion is the change in the H.4.1 reverse-repo liability line, which still holds about $356 billion — largely foreign official accounts that never drained — while the overnight facility is the piece of that line that emptied.

The following is analysis, not fact. The reconciliation above is an accounting identity, not a story about cause — but it reveals something the headline QT figure hides: three years of balance-sheet reduction left reserves down far less than the reverse-repo line, consistent with the overnight facility serving as a buffer that emptied first. Money-market funds pulled cash out of the reverse repo facility and into Treasury bills as bill supply surged and short-term repo rates climbed above the facility's floor — an explanation consistent with the timing, not one the balance sheet isolates ^sspeculative. The Fed reached the same read from the other direction. When it announced the end of runoff on Oct. 29, 2025 — effective Dec. 1 — Chair Powell pointed to repo rates rising relative to its administered rates, heavier use of its Standing Repo Facility, and the effective funds rate drifting up against the rate it pays on reserves — signs, in its telling, that reserves had reached a level somewhat above ample ^mmodeled. Read the two together and a mechanism is legible: while the buffer was full, the runoff drew down parked cash more than reserves; with the buffer gone, the next dollar of runoff or new Treasury issuance falls more on reserves, absent a fresh buffer or offsetting moves in other liabilities. That is what may make the phase that just ended the more forgiving one ^mmodeled.

The identity does not prove the facility "protected" reserves in any causal sense — the same total runoff could have drained reserves directly, and the split reflects where cash chose to sit, driven by relative rates and bill supply, not by the Fed steering it. Two measurement caveats sit underneath the reconciliation. The $1.714 trillion reverse-repo line includes a stable foreign official pool of roughly $350 billion that never moved, so the domestic facility's drain is close to but not identical with that figure; measured on its own daily series, the overnight facility fell $2.554 trillion from its December 2022 peak. And "ample" versus "scarce" reserves is a judgment, not a number read off the ledger — the Fed stopped precisely because it judged the margin was thinning, and analysts disagree on how far $2.9 trillion in reserves can fall before short-term rates lose their anchor. Note too that total assets are still edging lower as mortgage-backed securities run off; the $2.235 trillion is the total-asset decline from H.4.1, close to but not the same as the Fed's stated $2.2 trillion reduction in securities holdings.