U.S. Treasury Secretary Encourages Expansion of FIMA Tool Amid Concerns Over Yen Stability

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U.S. Treasury Secretary Janet Yellen has called for expanded use of the FIMA Repo Facility, drawing attention to potential Federal Reserve support for yen stability. The tool could help Japan manage liquidity without selling Treasuries, easing pressure on yields. Japan holds $1.1 trillion in U.S. bonds, with intervention estimates at $60–80 billion. FIMA allows foreign banks to borrow dollars using Treasuries as collateral, reducing market impact. The CFT framework may also influence how liquidity is managed in traditional and crypto markets. Fed Chair Kevin Warsh has signaled openness to collaboration. Analysts say FIMA expansion could ease Treasury market volatility. The move highlights growing coordination between the Treasury and the Fed, with implications for global liquidity and crypto markets.

BlockBeats news, on August 4, U.S. Treasury Secretary Bessent recently publicly called for the Federal Reserve to expand the use of the Foreign and International Monetary Authorities (FIMA) Repo Facility, sparking market interest in whether the Fed will more directly participate in Japan’s efforts to stabilize the yen.


It has been reported that the U.S. previously supported the yen’s stability through foreign exchange markets, marking a rare instance of direct U.S. involvement in currency intervention. Besent hopes that Japan will, in the future, access dollar liquidity through the FIMA facility rather than selling its U.S. Treasury holdings, thereby avoiding upward pressure on yields caused by Treasury sales.


Japan currently holds approximately $1.1 trillion in U.S. Treasury bonds, while market estimates suggest the scale of this yen intervention is around $60 billion to $80 billion. The FIMA facility allows foreign central banks to borrow U.S. dollars by pledging Treasury securities as collateral, helping to reduce the market impact of large-scale sales of U.S. Treasuries.


However, Bessen's public call for adjustments to Federal Reserve tools is uncommon. Former U.S. Treasury official Mark Sobel noted that past Treasury secretaries typically coordinated through private communications rather than publicly demanding changes to monetary tools.


The market is paying attention to the stance of new Federal Reserve Chair Kevin Warsh. Warsh previously stated that the Federal Reserve can collaborate with the executive branch and Congress on international financial matters and maintain close communication with Bessen.


Analysts note that expanding the FIMA facility could enhance foreign central banks' ability to manage liquidity of their U.S. Treasury holdings while reducing the impact on the U.S. Treasury market from currency interventions by countries such as Japan. However, the plan involves the Federal Reserve’s authority and still requires approval from the Federal Open Market Committee (FOMC).


The market believes that the core of this event is not just about the yen, but also about the U.S. Treasury publicly advocating adjustments to the Federal Reserve’s policy tools, which could impact the future boundaries of the relationship between the Treasury and the Fed.

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