The new step of the Fed opens a new repo facility to the foreign central banks in order for the financial market to function smoothly. Accordingly, the Fed is implementing a mechanism that will allow them to temporarily replace the US treasury bonds they hold with USD. In other words, in the simplest terms, it offers access to USD financing by taking its own bonds as collateral and facilitates access to USD liquidity.
Repo transactions will be overnight but it could change when necessary. Transactions will take place on IOER + 25 basis points. The transactions, which will start on April 6, will continue for 6 months.
According to the current data of TIC, the countries with the most USD bonds are below…
Source: US Treasury Department
Turkey is pretty behind in this ranking. The CBRT currently has US $ 2.8 billion in bonds.
Source: Bloomberg, US Treasury Department
Source: Tera Menkul
Hibya News Agency