U.S. Treasury Secretary Scott Bessent called on the Federal Reserve to expand its FIMA Repo Facility in an effort to support Japan's defense of the yen against currency pressure, according to a post on X on August 2.
Bessent did not specify an expansion amount but asked the Fed to "upsize" the facility, which currently allows financial institutions to borrow up to $60 billion each using foreign securities as collateral. The facility, formally the Foreign and International Monetary Authorities Repo Facility, serves as a backstop for central banks and foreign monetary authorities facing liquidity strain.
The request came as Japan faced sustained depreciation pressure on the yen. In July, Japan and the United States had jointly intervened in currency markets, a step Japanese authorities indicated was being taken to address what they characterized as "disorderly" yen movements.
The FIMA Repo Facility became a permanent tool of the Federal Reserve in 2021 after its debut during the 2020 pandemic crisis. It is designed to ensure that foreign central banks and international monetary authorities maintain access to dollar liquidity without having to sell securities at distressed prices. The facility typically operates with minimal usage during periods of market stability but can see increased demand during episodes of financial stress.
Bessent's appeal to expand the facility came with no statement on what size increase would be sufficient. The current structure caps borrowing at $60 billion per institution. The request also placed Treasury leadership in the position of openly seeking Fed action to increase liquidity capacity for foreign monetary authorities.
The Treasury has historically worked through quiet channels with the Federal Reserve on such matters. A public call by Bessent to upsize a liquidity facility meant that U.S. officials considered the situation substantial enough to merit explicit advocacy in markets where other governments and investors can observe it.
Whether the Federal Reserve will act on Bessent's request remains unclear. The central bank has authority to modify the FIMA facility's terms without congressional approval, but any expansion would represent a policy shift from its current posture and would require Board approval.
