South Korea's central bank to join Federal Reserve's Fima repo facility

[SEOUL] South Korea's central bank said on Thursday (Dec 23) it would join the US Federal Reserve's repurchase agreement facility for foreign and international monetary authorities in a pre-emptive move aimed at boosting its access to dollar liquidity when needed.

The so-called FIMA repo facility, set up in March 2020 to ease global dollar strains resulting from Covid-19, allows its account holders to exchange their US Treasury securities held with the Federal Reserve for US dollars.

"Through the facility, the Bank of Korea can immediately raise US dollars from the Federal Reserve if needed by utilising the bank's eligible securities," the Bank of Korea (BOK) said.

Under the facility, transactions will be conducted at an offering rate of 0.25 per cent and the maximum operation size will be US$60 billion.

The decision comes a week after the BOK said it agreed with the Fed to let a bilateral US$60 billion currency swap deal expire on Dec 31, 2021, as scheduled.

REUTERS