Federal Funds Sold

Definition of Federal Funds Sold

Federal funds sold are excess bank reserves lent in the federal funds market. When banks sell (lend) excess reserves in the fed funds market they acquire assets (fed funds sold) and lose a corresponding amount of reserves on their balance sheet. When banks borrow funds they gain reserves but they also gain a liability (fed funds purchased). These transactions are reversed when the borrowing bank returns the reserves to the selling bank.

Federal Funds Sold Details