Yellen Urges Fed to Expand FIMA Tool for Yen Stability

Treasury Secretary Yellen calls for expanded FIMA access to prevent Japan from selling $1.1T in Treasuries, raising questions on Fed-Treasury boundaries.

Woofun AI reports that US Treasury Secretary Janet Yellen has publicly urged the Federal Reserve to expand the Foreign and International Monetary Authority Repo Facility (FIMA Repo Facility). This move aims to allow Japan to access dollar liquidity without selling US Treasuries, thereby avoiding yield spikes. Japan currently holds approximately $1.1 trillion in US bonds, with market estimates suggesting a potential yen intervention scale of $60 to $80 billion. The FIMA tool enables foreign central banks to borrow dollars using Treasuries as collateral, mitigating market impact from large-scale sales.

Former Treasury official Mark Sobel noted that such public requests are rare, as past secretaries typically coordinated changes through private communication. Market attention now shifts to new Fed Chair Kevin Warsh, who has previously indicated openness to collaboration with the executive branch. Analysts suggest that expanding FIMA could improve liquidity management for foreign holders of US debt while reducing Treasury market volatility during currency interventions.

However, any adjustment requires approval from the Federal Open Market Committee (FOMC), highlighting potential tensions regarding the boundaries between Treasury advocacy and Fed independence.