QE vs The SRF: Shackled By A Poor Diagnosis

Fed misdiagnoses problems in the repo market

It is entirely possible that the Fed does recognize the limitations of its domestic standing repo facility (SRF), but cannot do much about it.

After all, the Fed doesn’t issue USTs – that’s the Treasury’s job, which means that the Treasury is best placed to increase the amount of collateral in the financial system, by issuing more debt, specifically T Bills.

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