The Fed balance sheet is the central bank's total assets, funded mostly by currency, bank reserves and the Treasury's cash account. M2 is the money households and firms hold (currency, bank deposits and retail money fund shares) and does not include bank reserves, so the two often move apart. M2 stood at $23.30T on 2026-08-31; the Fed's total assets were $6.75T on 2026-10-07.
| M2 | Fed balance sheet | |
|---|---|---|
| What it measures | Money held by the public: currency, checking and savings deposits, small time deposits and retail money fund shares. | Total assets of the Federal Reserve (WALCL), mostly Treasury and mortgage-backed securities. |
| What moves it | Bank lending and repayment, government deficit spending, and Fed purchases or runoff that reach non-bank holders. | The Fed: asset purchases (QE) and runoff (QT), plus lending through its facilities. |
| Frequency | Weekly | Weekly |
| Unit | US$ trillions | US$ trillions |
| Latest value | $23.30T (2026-08-31) | $6.75T (2026-10-07) |
| Change over 1 year | +$1.33T | +$161.0B |
| Role in the DLI | Not an input (shown for context) | Input, Policy / Reserves group |
| Source | FRED · WM2NS | FRED · WALCL |
Both lines share one axis and unit.
QE links them only partly. When the Fed buys a Treasury from a bank, the bank swaps the bond for reserves and M2 does not change. When it buys from a non-bank, such as a pension fund or a household, the seller’s bank deposit rises, so M2 grows along with reserves.
QT works in reverse, through the same two routes. In 2020–21 both grew together: the Fed bought assets on a large scale while deficit spending put deposits into household and business accounts.
Most of M2 is created and destroyed by banks, not the Fed: a new loan creates a deposit and a repayment removes one. Government deficits add deposits too. That is how M2 rose from late 2023 while the Fed was still shrinking its balance sheet.
They are also published on different schedules. The Fed reports its balance sheet every Thursday for the week to Wednesday (H.4.1); M2 comes out once a month in the H.6 release, weeks after the period it covers.
Over the year to these dates, M2 changed by +$1.33T and the Fed's total assets by +$161.0B.