In another push to bolster credit supply, Fed sets up repo facility for foreign, international monetary groups

A temporary repurchase agreement facility for foreign and international monetary authorities (FIMA) aimed at bolstering the supply of credit to U.S. households and businesses was unveiled Tuesday by the Federal Reserve.

In announcing the FIMA repurchase facility, the Fed said it would help support the smooth functioning of financial markets, including the U.S. Treasury market.

The new facility will be available beginning April 6; it will continue for at least six months, the Fed said.

“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,” the Fed said. “In these transactions, FIMA account holders temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions.”

The Fed said the facility would help support the U.S. Treasury market by providing an alternative temporary source of dollars other through sales of securities in the open market. The agency said it should also help ease pressures in global U.S. dollar funding markets.

Federal Reserve announces establishment of a temporary FIMA Repo Facility to help support the smooth functioning of financial markets