The Federal Reserve said it has set up a temporary dollar-based repurchase agreement facility for foreign and international monetary authorities (FIMA Repo Facility) to enable the smooth functioning of financial markets, including US treasuries, and maintain the supply of credit to American households and businesses
WASHINGTON (Pakistan Point News / Sputnik - 31st March, 2020) The Federal Reserve said it has set up a temporary dollar-based repurchase agreement facility for foreign and international monetary authorities (FIMA Repo Facility) to enable the smooth functioning of financial markets, including US treasuries, and maintain the supply of credit to American households and businesses.
"The FIMA Repo Facility will allow FIMA account holders, which consist of central banks and other international monetary authorities with accounts at the Federal Reserve Bank of New York, to enter into repurchase agreements with the Federal Reserve. In these transactions, FIMA account holders temporarily exchange their U.S. Treasury securities held with the Federal Reserve for US dollars, which can then be made available to institutions in their jurisdictions," the Federal Reserve said in a statement. "This facility should help support the smooth functioning of the US Treasury market by providing an alternative temporary source of US dollars other than sales of securities in the open market."
FIMA, along with dollar liquidity swap lines the Federal Reserve has established with other central banks, should help ease strains in global dollar-funding markets, the Federal Reserve said.
The Federal Reserve said it provides dollar-denominated banking services to FIMA account holders in support of Federal Reserve objectives and in recognition of the 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 six months, it added.
