The Federal Reserve's Foreign and International Monetary Authorities (FIMA) Repo Facility, designed to provide a dollar liquidity backstop for foreign central banks, has gone unused for eight straight weeks as of early August 2026. This period of inactivity follows a short-lived surge in borrowing during March and April 2023, coinciding with market upheaval surrounding the collapse of Silicon Valley Bank.
The facility allows foreign monetary authorities to temporarily exchange U.S. Treasuries for dollars, with agreements typically set for overnight or seven-day terms. The offering rate is generally higher than private repo rates, ensuring it is primarily utilized during unusual market stress. Despite its limited use, former Treasury official Scott Bessent recently advocated for upsizing the FIMA facility from its current $60 billion cap, suggesting it could aid countries like Japan in currency intervention without depleting their U.S. Treasury holdings.
However, expanding the facility would require approval from the Federal Open Market Committee and could complicate the Fed's efforts to reduce its balance sheet. Some analysts have also warned that increasing the cap might invite market participants to test the facility's limits. Data from the Federal Reserve's H.4.1 release, which publicly discloses amounts outstanding under the facility, confirms the zero utilization in recent weeks. The facility, made permanent in 2021 after its launch in 2020 during the COVID-19 pandemic, is intended to address global dollar funding issues that could impact U.S. financial markets, acting as an important backstop for smooth market functioning.
