Bessent: Fed May Need Larger FIMA Facility Amid Growing Bond Market

US Treasury Secretary Scott Bessent suggests that the Federal Reserve might need to increase the size of its Foreign and International Monetary Authority (FIMA) facility. The FIMA facility was created in 2020, and at the time, the bond market was much smaller. With the bond market having grown since then, Bessent thinks it would be reasonable for the Fed to consider up-sizing the facility.

Bessent emphasized that the purpose of facilities like FIMA is to protect the US economy from volatility in foreign markets. He also noted that the Japanese government is eyeing the FIMA facility as part of its effort to prop up the yen, which has been under pressure due to intervention efforts by Japan and the US.

Bessent described FIMA as a 'completely secure lending facility' where countries post collateral and borrow money from the Fed to intervene in their own markets. He stated that using FIMA is 'really no different than a swap line', which is also used for similar purposes.