Bessent calls for expansion of Federal Reserve foreign lending facility

Treasury Secretary Scott Bessent is pushing to expand the Federal Reserve’s Foreign and International Monetary Authorities repo facility, a relatively obscure backstop that lets foreign central banks borrow dollars against US Treasury collateral. The current cap sits at $60 billion, and Bessent wants it bigger. The motivation isn’t hard to decode. US allies are dealing with mounting currency pressures, particularly in the wake of geopolitical fallout from the Iran conflict and ongoing instability in the Japanese yen. How the FIMA facility actually works Foreign monetary authorities can temporarily swap their US Treasury holdings for fresh dollars, then buy them back later. It’s short-term liquidity, collateralized by some of the safest assets on the planet. When foreign central banks sell Treasuries to raise dollars the old-fashioned way, it pushes bond prices down and yields up. The FIMA facility exists precisely to prevent that kind of disorderly unwind. Bessent’s argument is essentially that $60 billion isn’t enough headroom given today’s geopolitical landscape. Beyond expanding the facility’s cap, Bessent has also floated the idea of establishing permanent swap lines with allie...