Fed repo backstop won’t help intraday liquidity stress
Banks say lack of guidance on resolution plans means SRF may not halt liquidity hoarding behaviour
A lack of supervisory guidance means the US Federal Reserve’s standing repo facility (SRF) may not help tackle intraday liquidity stresses, banks are warning. That would undermine its intended function as a backstop for the Treasury repo market.
The issues are twofold. Banks have not been told by the Fed whether they can assume access to the facility in their resolution liquidity planning. Furthermore, they cannot tap the SRF for liquidity on demand, given its arrangement as a once-daily
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