Fed May Boost FIMA Facility Amid Growing Bond Market Concerns

Treasury Secretary Scott Bessent thinks it would be reasonable for the Federal Reserve to consider increasing the size of the Foreign and International Monetary Authority (FIMA) facility. FIMA is a stopgap liquidity facility that was created in 2020, when the bond market was smaller.

Bessent made these comments on CNBC two days after confirming a joint US-Japan intervention last week to support the yen. He noted that the purpose of FIMA and other Federal Reserve facilities, such as swap lines, is to protect the US economy and prevent volatility from affecting it.

Bessent emphasized that the FIMA facility is secure and that countries posting collateral can borrow money to intervene in their economies, just like a swap line. He believes that up-sizing the facility would be reasonable given the growth of the bond market since its launch.