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The Borrower of Last Resort: What Explains the Rise of ON RRP Facility Usage?

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This article explains why the Fed has been borrowing more than $1.4 trillion from its borrower-of-last-resort facility: the Overnight Reverse Repo. We compare the roles of five channels potentially driving Fed borrowing (such as saving glut, quantitative easing, regulation, etc.) and find that one channel — the Treasury General Account drawdown — is associated with most of the current usage. We also find this channel's impact could be partially moderated if the Fed tapers quantitative easing accordingly.

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  • Kyler Kirk & Russell Wong, 2021. "The Borrower of Last Resort: What Explains the Rise of ON RRP Facility Usage?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 21(43), December.
  • Handle: RePEc:fip:fedreb:93811
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2021/eb_21-43
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    Keywords

    Overnight Reserve Repo; lending;

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