U.S. Treasury urges Fed to increase FIMA repo facility limit amid yen intervention, raising market and policy risks.
U.S. Treasury Secretary Scott Bessent called for the Federal Reserve to expand its $60 billion Foreign and International Monetary Authorities repo facility, aiming to support Japan’s currency interventions. The facility, which provides short-term funds to foreign authorities in exchange for U.S. Treasuries, was not originally designed for this purpose.
The Fed’s 12-member Federal Open Market Committee must approve any changes to the facility’s cap. The yen’s recent 40-year low against the dollar prompted a rare joint intervention by the U.S. and Japan last Friday, heightening pressure for additional measures.
Expanding the facility could introduce risks, including potential market tests of Washington and Tokyo’s resolve. The Fed has not commented on Bessent’s request, which was made via social media on Sunday.