Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Are Watching the Reverse Repo Facility
Episode 130 of Monetary Policy Explained with Fexingo. Lucas and Luna dive into the Federal Reserve's overnight reverse repo facility — a once-obscure tool that has become a key indicator of liquidity in the financial system. They explain how the facility works, why its usage surged to over $2 trillion in 2021 and then collapsed to near zero by 2024, and what that reversal signals about bank reserves, money market funds, and the Fed's balance-sheet runoff. Using concrete data from the New York Fed, the hosts connect the reverse repo facility to broader questions about quantitative…
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