Bessent Seeks Expanded FIMA Facility to Support Japanese Yen

The US Treasury Secretary, Scott Bessent, has urged the Federal Reserve to expand its Foreign and International Monetary Authorities (FIMA) Repo Facility. This facility allows foreign central banks to borrow US dollars by pledging their US Treasury securities as collateral rather than selling them on the market.

The proposal comes after recent efforts by US and Japanese authorities to support the yen failed to stabilize it fully. The yen has been under sustained pressure due to differences in interest rates between Japan and other major economies, which have led investors to move capital towards higher-yielding assets outside of Japan.

Bessent emphasized that expanding the FIMA facility would reflect the significant growth in global financial markets since its introduction in 2020. He argued that it could provide additional flexibility during periods of financial stress and reduce pressure on both the Treasury market and the yen simultaneously.