20 June 2012
The Fed stops publishing sweeps data
On 2 May 2012 the Board of Governors of the Federal Reserve System discontinued the publication of its retail deposit sweeps data.
This is what the announcement said: "The existing data will continue to be hosted on this website, however no new observations will be reported. The Federal Reserve Bank of St. Louis is currently exploring the costs and benefits associated with revising this data series. Once a decision has been made, a further announcement will be posted here." See the Fed Sweeps Data Page
It is true that sweeps have scarcely changed for the past few years. But that is exactly what one would expect in an environment of near-zero interest rates and poor bank lending. When the economy recovers these data will change and the Fed will have destroyed monetary data that is vital in calculating monetary aggregates.
The Fed does not seem to be aware of its own history. This is what it once said: "Since January 1994, hundreds of banks and other depository financial institutions have implemented automated computer programs that reduce their required reserves by analyzing customers' use of checkable deposits (demand deposits, ATS, NOW, and other checkable deposits) and 'sweeping' such deposits into savings deposits (specifically, MMDA, or money market deposit accounts). Under the Federal Reserve's Regulation D, MMDA accounts are personal saving deposits and, hence, have a zero statutory reserve requirement. ... Retail sweep programs have substantially distorted the growth of M1, total reserves and the monetary base, as Chairman Greenspan noted in his July 1995 Humphrey-Hawkins Act testimony to the Congress."