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Use of the Federal Reserve's repo operations and changes in dealer balance sheets

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Abstract

Before the 2008 financial crisis, the Federal Reserve (Fed) regularly conducted repurchase agreements (repos) in a fairly modest size with primary dealers to adjust the supply of reserves in the banking system and to keep the federal funds rate at the target set by the FOMC. During the economic downturn that followed the financial crisis, the Fed engaged in large scale asset purchases in order to provide additional monetary accommodation, and those purchases significantly increased the supply of reserves and eliminated the need for the Fed to engage in repo operations to increase reserves in the system.

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  • Mark A. Carlson & Zack Saravay & Mary Tian, 2021. "Use of the Federal Reserve's repo operations and changes in dealer balance sheets," FEDS Notes 2021-08-06-1, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:2021-08-06-1
    DOI: 10.17016/2380-7172.2961
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    File URL: https://www.federalreserve.gov//econres/notes/feds-notes/use-of-the-federal-reserves-repo-operations-and-changes-in-dealer-balance-sheets-20210806.html
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    Cited by:

    1. Thomas M. Eisenbach & Anna Kovner & Michael Junho Lee, 2022. "When It Rains, It Pours: Cyber Risk and Financial Conditions," Staff Reports 1022, Federal Reserve Bank of New York.

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