Open Market Operations During 2021
Over the year, significant use of the ON RRP facility helped maintain control over the federal funds rate and broadened the base of Federal Reserve liabilities supporting asset purchases, relieving upward pressure on bank balance sheets from growth in reserves. In order to ensure that the ON RRP facility continued to support effective policy implementation, the FOMC increased the ON RRP counterparty limit from $30 billion to $80 billion in March, and from $80 billion to $160 billion in September. Over the course of the year, the Federal Reserve Bank of New York (New York Fed) also announced adjustments to the counterparty eligibility requirements to make the ON RRP facility more accessible, in line with broader efforts to ensure that counterparty policies support effective policy implementation and promote a fair and competitive marketplace.
In July, the FOMC augmented the tools used to implement its ample reserves framework by establishing two standing repurchase agreement (repo) facilities to serve as backstops in money markets to support the effective implementation of monetary policy and smooth market functioning. The standing repurchase agreement facility (SRF) is intended to address unexpected pressures that can occasionally arise in overnight funding markets and spill over to the federal funds market. The standing foreign and international monetary authorities (FIMA) repo facility, which succeeds the temporary FIMA repo facility, provides a backstop source of temporary U.S. dollar liquidity to approved FIMA account holders in times of stress in global funding markets that could affect financial market conditions in the United States.
The full report is available at https://www.newyorkfed.org/medialibrary/media/markets/omo/omo2021-pdf.pdf