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Reverse Repo Facility

All articles tagged with #reverse repo facility

finance-and-economics2 years ago•1 min saved

"Record Surge in US Overnight Funding Rates as Fed's Reverse Repo Usage Soars at Year-End"

The Federal Reserve Bank of New York reported a significant surge in inflows to its overnight reverse repo facility, reaching $1.018 trillion on the last trading day of the year. This marks the first time inflows have exceeded $1 trillion since November 13, reflecting the facility's role in setting a floor for short-term interest rates. The increase comes as the Fed scales back liquidity and as money market securities become more appealing to investors. Despite the year-end spike, analysts predict a substantial decrease in inflows in the following weeks. No inflows were reported for the Fed's Standing Repo Facility, indicating no major liquidity issues in the money markets.

via Reuters|

#federal-reserve #finance-and-economics #interest-rates

finance2 years ago•5 min saved

The Vulnerabilities of America's Banks and Silicon Valley's Collapse.

Deposits in American banks have fallen by half a trillion dollars over the past year, making the financial system more fragile. Money-market funds, which saw inflows of $121bn last week, are unable to take deposits, but instead, cash leaving a bank for a money-market fund is credited to the fund’s bank account, from which it is used to purchase the commercial paper or short-term debt in which the fund wants to invest. The Federal Reserve’s reverse-repo facility, introduced in 2013, may be having a profoundly destabilising impact on banks, as use of the facility has jumped in recent years, owing to vast quantitative easing during covid-19 and regulatory tweaks which left banks laden with cash.

via The Economist|

#banking #deposits #federal-reserve