Dallas Fed's Logan Backs Voluntary Central Clearing for Fed Operations, Citing Benefits to U.S. Markets
Updated
Updated · KFGO · Jul 9
Dallas Fed's Logan Backs Voluntary Central Clearing for Fed Operations, Citing Benefits to U.S. Markets
3 articles · Updated · KFGO · Jul 9
Summary
Lorie Logan said the Fed could make open market operations more efficient and effective by voluntarily routing them through central clearing, a shift she said would strengthen U.S. financial markets.
The proposal covers monetary-policy tools such as standing repo operations, which supply cash to eligible firms and help keep money-market rates near the Fed’s target.
Standing repos have been lightly used despite Fed efforts to promote them, and Logan suggested a simpler clearing process could make the facility more attractive.
Logan also warned that borrowing levels must be managed carefully, saying market participants and officials need to balance leverage risks against market liquidity.