Bessent urges Fed to upsize FIMA facility

U.S. Treasury Secretary Scott Bessent publicly urged the United States — Federal Reserve to expand its Foreign and International Monetary Authorities (FIMA) repo facility, which allows foreign central banks to borrow U.S. dollars against U.S. Treasury collateral. The request came after the U.S. Treasury and Japan's Ministry of Finance conducted a rare joint intervention to support the Japan — Japanese yen, which had fallen to 40-year lows. Bessent argued that upsizing the facility would provide additional firepower for Japan to intervene without selling its large Treasury holdings. The Fed has not commented on the request, and any change would require approval by the United States — Federal Open Market Committee. Analysts are divided: some see it as a positive signal for Treasury markets, while others warn it could invite markets to test U.S.-Japan resolve and complicate the Fed's balance sheet reduction efforts.