Ex-New York Fed Boss Says It’s Time to Overhaul Repo Toolkit (3)

William Dudley, who used to oversee the Federal Reserve’s interaction with financial markets, said the central bank should introduce a long-discussed but never implemented tool to ensure U.S. cash markets remain calm.

In a column published Monday by Bloomberg Opinion, the Fed Bank of New York’s former president recommended creating a standing repurchase-agreement facility, joining a chorus of proponents. It should be open, he argued, to a broad set of counterparties and accept Treasury and agency mortgaged-backed securities as collateral.

WATCH: Bill Dudley says the Fed must be forward thinking in its new monetary policy regime.

(Source: Bloomberg)

“Such a facility would effectively cap repo rates,” Dudley wrote. “It would also address the potential problem of ...