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Liquidity: Difference between revisions
→Reverse Repo
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The ON RRP facility has attracted a record amount of cash after enjoying growing daily transaction volume since mid-2021. | The ON RRP facility has attracted a record amount of cash after enjoying growing daily transaction volume since mid-2021. | ||
Its important to monitor it, because if the FED decided to lower the interest rate it pays, this could cause the reverse repo to drain since investors could decide to look for other assets for return. This could a lot of liquidity to bank reserves and markets. <ref>https://www.reuters.com/markets/us/sooner-or-later-fed-may-need-technical-tweaks-rate-control-toolkit-2023-02-01/</ref> | Its important to monitor it, because if the FED decided to lower the interest rate it pays, this could cause the reverse repo to drain since investors could decide to look for other assets for return. This could inject a lot of liquidity to bank reserves and markets. <ref>https://www.reuters.com/markets/us/sooner-or-later-fed-may-need-technical-tweaks-rate-control-toolkit-2023-02-01/</ref> | ||
* The reserve repo has been stable at about a trillion dollars since last year. <ref>https://www.newyorkfed.org/markets/desk-operations/reverse-repo</ref> | * The reserve repo has been stable at about a trillion dollars since last year. <ref>https://www.newyorkfed.org/markets/desk-operations/reverse-repo</ref> | ||