FAST FIVE: Fed Launches Repo Facility To Provide Dollars To Foreign Central Bank
foreign central banks which will be allowed to exchange Treasuries held in custody at the Fed for US dollars.
In other words, just a week after the Fed “enhanced” its swap lines with central banks and included a bunch of non G-5 central banks to the list of counterparties, it has found that this is not working – perhaps due to the prohibitive rates on the facility – and is now handing out dollars outright against US denominated securities.
We wonder if the central bank uptake will be any higher than the repo facility aimed at US dealers and which is now redundant.
The Federal Reserve provides US dollar-denominated banking services to FIMA account holders in support of Federal Reserve objectives and in recognition of the US dollar's predominant role as an international currency.
The FIMA Repo Facility, which adds to the range of services the Federal Reserve provides, will be available beginning April 6 and will continue for at least 6 months.