As shown [3]here previously [4], there is a direct correlation between the excess reserves created by the Fed, and the cash holdings of domestic and foreign banks (operating in the US) disclosed by the Fed's weekly H.8 statement [5]. So with the Fed's reserves reaching new all time highs with every week courtesy of the $85 billion in monthly flow injected by the Fed...
[6]
... some wonder where is this cash ending up. The answer: in the week ended July 31, a record $1,157 billion was parked with foreign banks in the US, while "just" $1,112 of the Fed's created reserves was allocated to US banks.
This breakdown is shown in the chart below:
[7]
[8]
Or, in short, the Fed's QE-created reserves have gone to:
- Foreign banks: 51%
- Large-domestic banks: 36%
- Small domestic banks: 13%
At least someone is benefiting from the Fed's generosity, in that order.
