U.S. Treasury Secretary Bessent Calls for Fed to Expand FIMA Repo Facility to Help Japan Defend Yen
U.S. Treasury Secretary Scott Bessent has urged the Federal Reserve to expand its FIMA Repo Facility (Foreign and International Monetary Authorities Repo Facility) to assist Japan in defending the yen, a move described by Bloomberg as a rare operation.
Bessent stated in a social media announcement on August 2 that the FIMA facility is an "important backstop" and should be expanded in the coming months. This facility allows foreign central banks to obtain short-term dollar loans using U.S. Treasury securities as collateral, with a limit of $60 billion and a maximum term of 7 days.
This move enables Japan to finance yen purchases through FIMA without directly selling U.S. Treasuries in the market, thus avoiding an increase in U.S. Treasury yields. Japan and the U.S. conducted a joint intervention on August 1 to counter the "disorderly yen movement," as the yen had previously fallen to a 40-year low.
Source: Public Information
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Bessent's call is not an isolated event but a continuation of the September 2025 U.S.-Japan Joint Statement, which authorized both parties to coordinate interventions during "excessive volatility and disorderly movements." The joint action on August 1, 2026, marks the first execution of this, reflecting that "exchange rate stability" has become a core issue in the U.S.-Japan alliance.
Similar cases can be compared to the 2011 U.S.-Japan joint intervention in the yen (after the Great East Japan Earthquake) and the 2000 G7 joint intervention in the euro—reflecting the logic of a "temporary truce" in a "currency war" under extreme volatility: when depreciation reaches the "competitive devaluation" red line, major economies choose "coordinated stability" rather than "unilateral laissez-faire."
In terms of capital pathways, the FIMA facility was originally designed during the 2020 pandemic to "avoid foreign central banks selling U.S. Treasuries for dollars." Reactivated in 2026 for the "yen defense battle," it creates a closed loop of "U.S. Treasury collateral → dollar loans → yen purchases → holding U.S. Treasuries," preventing Japan from selling U.S. Treasuries and causing a spike in yields.
Essentially, this represents an upgrade in "central bank swap agreements" amid regulatory changes: shifting from "bilateral currency swaps" (like those between the Fed and the ECB) to "U.S. Treasury collateral financing." The underlying reason is that Japan holds over $1 trillion in U.S. Treasuries, and direct sales would impact the U.S. Treasury market. FIMA provides an alternative path to obtain dollars without selling Treasuries.
ABAB News · Cognitive Laws
- Defending the yen is not just Japan's issue; it's a matter for the U.S. Treasury market.
- When an ally's currency collapses, your bond market will also follow.
- The truth about central banks: it's not about printing money; it's about mutual collateral.