WALCL-to-GDP: The Fed’s Balance Sheet Is Now the Smallest of the Big Four

Comparing central bank balance sheets in dollars, euros and yen says nothing about their economic weight. Scaled to GDP, they produce a clear ranking, and the Fed sits at the bottom of the four major central banks.

Since their 2021-22 peaks, all four balance sheets have shrunk, but not at the same speed or with the same tools. Nominal growth did part of the work for them.

Why scale a balance sheet to GDP

On September 30, 2026, the Federal Reserve’s total assets came to $6,743 billion (WALCL series). The Eurosystem reported €6,164 billion at the end of 2025, the Bank of Japan ¥678 trillion, and the Bank of England £855 billion at the end of June 2025. These amounts cannot be compared directly: neither the currencies nor the size of the economies match.

The ratio of the balance sheet to annual nominal GDP corrects for both. It measures the share of a year’s output that the central bank holds as assets: government bonds, loans to banks, private securities. The same scaling logic places the US M2-to-GDP ratio within its own history, and the Fed’s own ratio is tracked in the Fed balance sheet to GDP dataset.

Method matters. For each bank, we took the last observation of each quarter and divided it by the sum of the latest four quarters of nominal GDP, or by GDP at an annual rate where it is published that way. The sources are the Fed, ECB and Bank of Japan balance-sheet series carried by FRED, and the Bank of England’s database together with GDP from the Office for National Statistics.

Four paths, one clear ranking

In the summer of 2008, before Lehman Brothers failed, the four balance sheets weighed between 8% and 21% of GDP: 8.1% for the Fed, 8.6% for the Bank of England, 15.7% for the ECB and 21.3% for the Bank of Japan. Fifteen years of asset purchases then multiplied them by four to six.

The peaks came at different times. The Fed’s was in the second quarter of 2020, at 35.5%, when GDP collapsed while the balance sheet ballooned. The ECB peaked at 68.1% at the end of 2021, the Bank of England at 49.0% at the same point, and the Bank of Japan at 127.1% in the first quarter of 2022.

Today’s ranking is unambiguous. In the second quarter of 2026, the Fed stood at 20.7%, the ECB at 38.2% and the Bank of Japan at 92.8%. The Bank of England, which publishes its total balance sheet with a lag, was at 28.7% at the end of June 2025. Measured against its economy, the Fed has the smallest balance sheet of the four.

The Fed is not mid-table. It is last.

The denominator did part of the work

Between the end of the first quarter of 2022 and the end of 2025, the Fed’s balance sheet went from $8,937 billion to $6,641 billion, down 26%. Over the same period, US nominal GDP rose 24.6%, driven by inflation as much as by real growth. The ratio fell from 35.4% to 21.1%.

The two effects compound. Had GDP stayed at its early-2022 level, the same end-2025 balance sheet would still represent 26% of GDP. Inflation in 2021-23 thus shrank central banks’ relative weight without them selling a single extra security. The mechanism applies to all four, with an intensity that depends on each economy’s nominal growth.

Different speeds, different tools

Measured from its peak, the ratio fell most slowly at the Fed: 2.5 points of GDP a year through the second quarter of 2026. The ECB cut its ratio by 6.7 points a year, the Bank of England by 5.8 points a year through mid-2025, and the Bank of Japan by 8.1. Those speeds reflect different instruments.

At the Fed, the reduction was passive: maturing securities were no longer reinvested above monthly caps, and the Committee ended the program on December 1, 2025, according to its October 29, 2025 statement. How the runoff unfolded is covered in the Fed’s 2022-2026 QT runoff.

For the ECB, most of the decline came from banks repaying long-term loans. Eurosystem longer-term refinancing operations fell from €2,217 billion in June 2021 to €17 billion at the end of 2024 (ECB weekly statistics). On top of that came the end of reinvestments under the APP from July 2023 and under the pandemic PEPP at the end of 2024, according to the ECB pages on its purchase programmes.

The Bank of England is the only one actively selling bonds. Between October 2025 and September 2026, its stock of gilts held for monetary policy purposes fell by £70 billion, of which £21 billion through sales, according to the Monetary Policy Committee minutes of September 2026. The Committee now sets sales at £20 billion a year, with an average reduction of £46 billion a year that would complete the programme in September 2034 on its projections.

The Bank of Japan, finally, has scaled back its government bond purchases without any sales programme. Its assets went from ¥765 trillion in August 2024 to ¥645 trillion in August 2026, and its ratio dropped back below 100% of GDP in the first quarter of 2026, for the first time since the third quarter of 2019.

What the ratio does not tell you

The same ratio covers very different constraints. The Bank of Japan’s balance sheet rests on public debt held overwhelmingly at home, the Fed’s on the world’s reserve currency, the ECB’s on twenty-one sovereign debts with no common treasury. The level of the ratio says nothing about what is sustainable for each.

US public debt shows another measurement trap. Gross federal debt stood at 122.6% of GDP at the end of 2025, and debt held by the public at 98.2% (GFDEGDQ188S and FYGFGDQ188S series on FRED). The gap is debt the federal government owes to itself, notably to the Social Security trust funds.

Nor does the ratio measure the policy stance. A central bank can keep a large balance sheet while raising rates, as the ECB did in 2026, or shrink its balance sheet while cutting rates, as the Fed did in 2025. The two instruments have to be read separately.

What to watch next

Since QT ended in December 2025, the Fed’s balance sheet has grown again in dollars, from $6,641 billion at the end of 2025 to $6,743 billion at the end of September 2026. Relative to GDP, it has nonetheless stayed close to 21%, because the economy grew faster than the purchases of short-term bills. The ratio can keep falling with no balance-sheet reduction at all, as long as nominal growth outpaces asset growth.

The useful indicator is the gap between those two rates: the annual change in the balance sheet in domestic currency, and the annual change in nominal GDP. When the first exceeds the second, the central bank is regaining weight in its economy, even without an announced purchase programme. The broader framework is set out in the reference article on the Fed balance sheet.

Last updated — 8 October 2026