Fed extends swap lines, FIMA repo facilities to next September

Liquidity swap line and the “foreign and international monetary authorities” (FIMA) repo facilities of the Federal Reserve will live on through Sept. 30 of next year, the central bank said Wednesday, extending the service of the facilities set up last spring in response to the financial impact of the coronavirus crisis.

The Fed said that extending the facilities (known more formally as temporary U.S. dollar liquidity swap lines and the temporary repurchase agreement facility for FIMA) would help sustain recent improvements in global U.S. dollar funding markets by serving as an important liquidity backstop.

“In addition, the FIMA repo facility will help continue to support the smooth functioning of the U.S. Treasury market by providing an alternative temporary source of U.S. dollars other than sales of securities in the open market,” the Fed said.

The extension of the temporary swap lines, the Fed said, applies to all nine central banks previously announced on March 19 and extended in July. The swap lines, the Fed said, allow the provision of U.S. dollar liquidity in amounts up to $60 billion each for the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank (Sweden) and $30 billion each for the Danmarks Nationalbank (Denmark), the Norges Bank (Norway), and the Reserve Bank of New Zealand.

The FIMA repo facility will continue as originally announced on March 31 and similarly extended in July. The latest extension, the Fed said, will allow approved FIMA account holders to continue to temporarily exchange their U.S. Treasury securities held with the Federal for U.S. dollars, which can then be made available to institutions in their jurisdictions

Federal Reserve announces the extension of its temporary U.S. dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities (FIMA repo facility) through September 30, 2021