Persistently massive inflows of cash into a key Federal Reserve facility are in large part being driven by a bank liquidity regulation change from last year, a report from the New York Fed said Friday.
The Fed’s facility offers what are called reverse repos, which allow eligible firms to park cash at the central bank in exchange for a risk-free return. The rule playing a role in the inflows is a regulation called the Supplementary Leverage Ratio, which determines how much liquidity banks need to have on hand.
After the regulation change banks were less inclined to take deposits, and that cash instead flowed to the money funds, which had to invest that money somewhere, the paper said. Meanwhile, banks reduced short-term debt offerings, constraining what money funds could invest in. And on top of that, Fed rate hikes further drove cash into money market funds as financial markets navigated a shift in the cost of short-term borrowing, according to the authors.
The Fed’s reverse repo facility was largely unused into the spring of 2021 and then inflows steadily ramped up. Inflows peaked at $2.426 trillion at the end of September before easing slightly to Friday’s inflow of $2.05 trillion.
France Dernières Nouvelles, France Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
Former Obama economic adviser will lead the Chicago Federal ReserveFormer Obama economic adviser Austan Goolsbee will lead the Chicago Federal Reserve
Lire la suite »
Federal Reserve Bank of Chicago Names Ex-Obama Adviser Austan Goolsbee as Next LeaderAs head of a regional Fed bank, Goolsbee will have a vote on the central bank’s interest rate decisions in 2023. Each year, four of the regional bank presidents rotate into voting positions on the Fed’s rate-setting committee.
Lire la suite »
The Fed's path to a 'Goldilocks' economy just got a little more complicatedAs far as jobs reports go, November's wasn't exactly what the Federal Reserve was looking for.
Lire la suite »
Inflation is America's 'No. 1' problem and could take until 2025 to resolve: NY Fed presidentNew York Federal Reserve President John Williams detailed the widespread initiatives that the Fed has taken to combat the U.S.'s sky-high inflation rates.
Lire la suite »
Bills place edge rusher Von Miller on injured reserve with knee injuryThe Buffalo Bills are placing star edge rusher Von Miller on the injured reserve list due to his knee injury, meaning he will have to miss at least the next four games.
Lire la suite »
Bills Placing Von Miller on Injured Reserve With Knee InjuryThe Bills announced Thursday that they are placing Von Miller on injured reserve, keeping him off the field for at least four weeks
Lire la suite »