Bank Reserves + Immediate Buffers

Think of it this way

It is the water coming out of the shower plus the bottles you keep stored at home. Everything you could use today if it were suddenly needed.

What is Bank Reserves + Immediate Buffers?

The same measure of bank reserves, adding the money that money market funds have parked in the RRP. That money is not in banks' accounts today —it is at the central bank— but it can come back tomorrow without anyone having to sell anything or ask permission, which is why it counts as potentially immediate liquidity. The Fed repo is not added here, even though it might seem it should: when the Fed lends through repo, that money ALREADY shows up inside bank reserves, so adding it again would count it twice.

How to read Bank Reserves + Immediate Buffers

The distance between this line and the reserves-only line is the only thing to look at: it is the size of the cushion. WIDE means ample room to absorb Treasury issuance without touching reserves, as between 2021 and 2023, with the RRP above two trillion. NARROW, with the two lines almost touching, means that margin is gone and each issue comes straight out of the banks. Lag: none, or +15 days at most: the cash is already in the accounts.

What Bank Reserves + Immediate Buffers means for the market

The narrowing of this gap is one of the most important underlying signals of recent years, and it explains why the same volume of debt issuance has more effect on the market today than in 2022.

Where the money flows

The same circuit as reserves, extended by one step. Example: a money market fund that today has 200 billion parked in the RRP can decide tomorrow to buy Treasury bills or lend it to a bank, and that money enters the banking system within hours. While it sits in the RRP it finances nothing; as soon as it leaves, it does. That is the asymmetry that justifies adding it: the RRP is a Fed liability that sits OUTSIDE banks' accounts.

What to watch in Bank Reserves + Immediate Buffers

The only thing to look at here is the GAP between the two lines, not their level. Toggle the version switch on and off and focus on the gap: in 2021 and 2022 it was more than two trillion, and today it is practically zero, because the RRP has emptied. In actionable terms: a large Treasury issue used to be absorbed by that cushion without touching the banks; now it comes straight out of reserves, so the same debt headline weighs more than it did three years ago.

Reserves plus the money that is not in banks today but could be tomorrow.