Key Fed Backstop Unable to Contain Repo Turmoil, Barclays Says
- Standing Repo Facility not meant to support entire repo market
- Policymakers may want to consider modifications, Abate says
This article is for subscribers only.
Overnight funding markets may be on their own during the next bout of turbulence as a key Federal Reserve backstop is unable to support the entire space unless upgrades are made, according to Barclays Plc.
The Standing Repo Facility, or SRF, is used by eligible banks and primary dealers to borrow funds overnight in exchange for Treasury and agency debt. By providing financing at rates set by the Fed, the goal is to contain the overall repo market from pushing outside the central bank’s target range.