Mechanism Explainer

How the FIMA Repo Facility Works

Japan borrows dollars without selling its US Treasury holdings

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Bank of Japan

Holds $1.14 trillion in US Treasuries

Collateral holder
Pledges Treasuries as collateral
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NY Federal Reserve

Accepts Treasuries, holds them temporarily

Lends dollars overnight
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Japan gets dollars

Used to buy yen in open market

No Treasury sale needed