First, by the end of 2014, following the large - scale asset purchase programs, the Federal Reserve balance sheet was funded by
about $ 3.1 trillion in
liabilities other than Federal Reserve notes, which were mostly in the form of reserves in
excess of the amount banks were required to hold; in contrast, there were only $ 64 billion of non-Federal Reserve note
liabilities in June 2007, of which only
about $ 2 billion were
excess reserves.
Still, the Fed also earns an interest spread between its assets and its
liabilities, providing
about 3 % annually (as a percentage of assets) in
excess interest to eat through, which would allow a further 50 basis point rise in interest rates over a 12 - month period without wiping out that additional cushion.