FIMA Repo Facility: Stabilizing Foreign Central Bank Cash
How the Fed's FIMA facility allows foreign central banks to access USD liquidity without dumping U.S. Treasuries into secondary markets.
1. What Is the FIMA Repo Facility?
Established in March 2020, the Foreign and International Monetary Authorities (FIMA) Repo Facility allows foreign central banks and monetary authorities holding account balances at the Federal Reserve Bank of New York to temporarily exchange their U.S. Treasury securities for U.S. dollar cash.
2. Preventing Fire Sales of U.S. Treasuries
During global liquidity crunches, foreign central banks often need urgent dollar liquidity to defend their domestic currencies or supply dollar funding to local banks. Before the FIMA facility, foreign institutions had only one option: dump U.S. Treasuries directly into the open secondary market, worsening Treasury market volatility.
The FIMA facility acts as a pressure relief valve: