Bessent’s Push to Expand FIMA Repo Puts Focus on Key Tool for Japan’s Yen Defense

After a joint US-Japan foreign-exchange intervention, market attention has shifted to the Federal Reserve’s Foreign and International Monetary Authorities Repo Facility, or FIMA repo, after Treasury Secretary Scott Bessent publicly urged its expansion.

Bloomberg reported on Aug. 5 that the facility allows foreign central banks and monetary authorities to borrow dollars from Federal Reserve Banks against US Treasuries. The borrowing limit is $60 billion per institution per day.

Japan can use FIMA repo to raise dollars to defend the yen instead of selling its Treasury holdings outright. Under that approach, it would borrow dollars against the bonds and use the funds to buy yen, avoiding large selling pressure in the US Treasury market.

Bessent recently described FIMA repo as an important backstop for Japan’s yen defense and argued that the facility should be expanded in the coming months. The Japanese government has also said it plans to use FIMA repo in future efforts to support the yen.

Still, the facility was designed as an emergency liquidity tool for periods of market stress, limiting its usefulness for sustained foreign-exchange intervention. Its borrowing cost is higher than in the private repo market, and each institution is subject to the $60 billion daily cap.

The market is also watching Bessent’s public push for changes to a Fed facility. FIMA repo is overseen by the Foreign Currency Subcommittee under the Federal Open Market Committee, and it is unusual for a Treasury secretary to publicly call for changes to the program.