Japan's MOF Plans to Use Fed's FIMA Repo Facility; Bessent Backs Expansion

Japan's Ministry of Finance has informed the Federal Reserve that it plans to begin using the Foreign and International Monetary Authorities (FIMA) repo facility. The facility allows eligible central banks to temporarily exchange U.S. Treasury securities for dollars, providing a liquidity backstop without the need to sell assets outright.

Separately, U.S. official Bessent stated that the FIMA repo facility is a crucial backstop and urged its expansion over the coming months. The remarks underline ongoing efforts to reinforce global dollar funding frameworks.

The FIMA repo facility was introduced in 2020 to ease strains in dollar funding markets. Japan's announcement signals preparation to tap this tool if needed, while Bessent's comments suggest appetite for broadening its availability.