The U.S. Federal Reserve on Tuesday made a different move to shore up economical markets, saying a new facility that will allow overseas central banks to swap U.S. Treasuries temporarily for dollars.
The Fed’s FIMA Repo Facility reflects considerations in excess of stresses in U.S. dollar markets as companies and governments all over the globe scramble for the risk-free haven of greenbacks amid the coronavirus disaster.
Foreign central banks that have accounts at the New York Fed will now be in a position to temporarily raise dollars by offering Treasuries to the Fed’s Technique Open up Marketplace Account and agreeing to get them again at the maturity of the repurchase settlement.
The Fed, in impact, will make overnight dollar financial loans to the central banks, taking U.S. Treasury financial debt as collateral.
“By allowing for central banks to use their securities to raise dollars immediately and effectively, the facility will