Exit Strategy

The video tutorial discusses the transformation of the Federal Reserve's balance sheet from 2007 to 2011, focusing on the changes in size and composition. It explores the concept of exit strategy, which involves draining reserves or selling assets. The tutorial proposes viewing the Fed's transformation through its risk exposures, including interest rate swaps, money market swaps, and credit default swaps. The aim is to understand these exposures separately and consider different liquidation strategies.

What transformation occurred in the Federal Reserve's balance sheet between April 2007 and April 2011?

How does the concept of exit strategy relate to the Federal Reserve's actions?

What are the different types of risk exposures mentioned in the text?

Explain the significance of credit default swap exposure in the context of the Federal Reserve.

Why is it important to think separately about liquidating different exposures?