NY Fed, Lorie Logan speech, Liquidity Shocks: Lessons Learned from the Global Financial Crisis and the Pandemic

“At its July meeting, the FOMC established two standing repo facilities as tools in the Fed’s policy implementation framework: a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA Repo Facility).  These facilities will serve as backstops in money markets to support the effective implementation of monetary policy and smooth market functioning.”

“The SRF enhances control over the federal funds rate by limiting pressures in the repo markets that could spill into other overnight money markets.  The facility is positioned and priced as a backstop with a minimum bid rate of 25 basis points, corresponding to the top of the target range for the federal funds rate.  This pricing allows for robust private activity to occur under most market conditions, but limits the potential for spikes in repo rates to move the effective federal funds rate outside of the target range.”