I’ve scanned some blogs about the sudden fall-out of non-borrowed reserves of depository institutions from $42 bln in November to $200 mln last week. It looks scary, but let’s wait for some professional explanation before we panic.

From my side I see the definition

Nonborrowed Reserves – measure of banking system reserves, consisting of Total Reserves (member bank deposits in Federal Reserve Banks, plus vault cash), less funds borrowed (Borrowed Reserves) at the Federal Reserve Discount Window

As far as I see the Taf is counted. The difference between Taf and Discount window is that banks borrow from discount window when they are in the deep doo-doo but they borrow from Taf because they can.

If outstanding Taf is about $30 bln then real non-borrowed reserves are somewhere between $200 mln and $30 bln, but the picture is blurry. Effectively the Taf killed our ability to properly evaluate this number. For now let wait and see what happens