The Federal Reserve on May 14, 2026 released results from two Senior Financial Officer Surveys (SFOS) — one polling small-and-mid-sized banks, the other co-administered with the Federal Reserve Bank of New York and covering banks that hold roughly three-fourths of total banking system reserve balances. [Federal Reserve press release]
The two surveys land at a pivotal moment for the plumbing of U.S. capital markets. Reserve balances at the Fed sit at $3.10 trillion as of the H.4.1 release for the week ending May 13, 2026, while the long end of the curve has pushed to 5.18% on the 30-year and the effective fed funds rate prints at 3.62%. [H.4.1] [H.15]
Two surveys, one question: are reserves ample?
The Fed’s first survey, conducted between January 30 and February 9, 2026, sampled banks with a median asset size under $5 billion. The second, run with the New York Fed from March 20 to March 30, 2026, polled large banks collectively holding about three-quarters of system reserves.
Both surveys asked CFOs and treasurers the same family of questions the Fed has refined since launching the SFOS in 2014: how do you manage your reserve balance day-to-day, what are your expectations for your balance sheet over the coming quarters, how active are you in money markets, and how do you view the discount window?
The results matter because they feed directly into how the Federal Open Market Committee thinks about the pace and endpoint of quantitative tightening. The Fed’s stated framework is an “ample reserves” regime — but “ample” is calibrated against what banks themselves consider their lowest comfortable level of reserves (LCLoR). SFOS is one of the only formal mechanisms the Fed has to gather that information directly from balance-sheet operators.
The balance-sheet backdrop
Reserve balances have come down from a 2021 peak above $4.2 trillion as QT has rolled Treasury and agency MBS holdings off the Fed’s portfolio. The total balance sheet stood at $6.73 trillion on May 13, with $4.45 trillion in Treasury securities and $1.98 trillion in agency MBS. The overnight reverse-repo facility (RRP) — long a release valve for excess money-fund cash — has dwindled to about $300 billion, well below the $2 trillion-plus levels seen in 2022 and 2023.
| Fed balance sheet line item | Value ($ trillions) |
|---|---|
| Total assets | 6.73 |
| U.S. Treasury securities | 4.45 |
| Agency MBS | 1.98 |
| Reserve balances of depository institutions | 3.10 |
| Overnight reverse repo (RRP) | 0.30 |
Whether $3.10 trillion is “enough” reserves is a judgment, not a calculation. The 2019 repo-market dislocation — when overnight rates spiked above 9% with reserves around $1.4 trillion — is the cautionary tale that hangs over every QT decision. Then-Chair Powell described that episode as evidence the system had moved from “ample” toward “abundant-to-ample” territory faster than the Fed realized. The point of SFOS is to avoid being surprised by that boundary again.
The discount window question
The second focus of the May 14 release is the discount window — the Fed’s standing lending facility for solvent depository institutions. After the spring 2023 regional-banking episode (Silicon Valley Bank, Signature, First Republic), the Fed has been actively working to reduce stigma around the window, improve operational readiness, and consider whether to expand operating hours and days.
The May 14 release accompanies a separate ongoing Fed dialogue with banks about whether the discount window should operate on more days, on weekends, or on a longer-hours schedule — particularly as the Fed’s payments system (Fedwire and FedNow) moves to expanded operating hours in 2027. A lending facility that closes when payments are still moving is a structural mismatch the Fed is openly trying to address.
Discount window usage tells the same story: even after the post-SVB stigma push, the facility’s average daily borrowing in 2025 stayed well below the borrowing seen during the March 2023 panic, when primary-credit balances briefly exceeded $150 billion. Banks may say in surveys they are “ready to borrow,” but actual usage remains a fraction of capacity in calm conditions.
Capital-markets implications
Three things to watch as the May 14 SFOS feeds into the next FOMC cycle:
1. Pace of QT runoff and a potential endpoint. The FOMC slowed Treasury runoff caps in 2024 from $60 billion to $25 billion per month. If banks in the survey describe reserves as comfortably above their LCLoR, the Committee has more room to let QT continue; if they hint at any tightening, expectations for a QT end-date pull forward.
2. RRP drawdown and money-market floor. With RRP near $300 billion, the cushion between Fed-balance-sheet reserves and money-market funds is thin. SFOS responses on money-market activity inform how aggressively bills issuance and bank funding will compete for the same dollars.
3. Discount window operating days. Any signal from large banks that they would use a longer-hours window for end-of-day reserve management — not just for emergency borrowing — would meaningfully change the case for expansion. That would, in turn, change the volatility regime around month-end and quarter-end in repo.
Where rates sit on May 19
The curve is positively sloped and steep at the long end — exactly the configuration that makes the SFOS findings on bank balance-sheet expectations interesting. If large banks tell the Fed they expect their securities holdings to grow as the curve steepens, that is an organic source of demand for the very Treasuries the Fed has been shedding. If they signal the opposite, the Treasury’s borrowing burden lands more squarely on money funds and foreign holders.
What’s next
The full survey questions and aggregated results are posted on the Fed’s SFOS data page. Expect Fed officials to draw on the findings in upcoming speeches on the framework review and on any communication around the future path of the balance sheet. The next set of FOMC minutes — due in roughly three weeks — will be the first opportunity to see how heavily the SFOS results weighed on the Committee’s thinking about reserves and the runoff path.
Sources
- Federal Reserve Board, press release, May 14, 2026 — SFOS results on discount window and reserve management
- Federal Reserve H.4.1, Factors Affecting Reserve Balances, week ending May 13, 2026
- Federal Reserve H.15 Selected Interest Rates, data as of May 19, 2026
- Federal Reserve, Senior Financial Officer Survey program page
- Federal Reserve, Fedwire Funds Service expanded operating hours initiative
Disclosure: This article was produced with AI assistance and reviewed before publication. It is for informational purposes only and is not investment advice.