The Federal Reserve Bank of New York temporarily added $610 million of reserves to the banking system with repurchase agreements as part of a program to test the central bank’s operational readiness.
The transaction, part of a series of open-market operations began in 2009, doesn’t represent any change in monetary policy, according to a statement on the New York Fed’s website. Treasuries were the only collateral in the agreement.
In repos, the Fed buys U.S. Treasury, mortgage-backed and so-called agency debt from dealers for a set period, temporarily raising the amount of money available in the banking system. At maturity, the securities are returned to the dealers, and the cash to the Fed.
The Fed has historically used repos and reverse repos to help maintain the proper level of money in the banking system to keep overnight interest rates close to the central bank’s target. The Fed has held its target rate for overnight loans between banks in a range of zero to 0.25 percent since December 2008.