Discussion Paper
A Closer Look at the Federal Reserve’s Securities Lending Program
Abstract: The Federal Reserve lends specific Treasury and agency debt securities held in its System Open Market Account (SOMA)—and accepts general Treasury securities as collateral—through its daily securities lending program. The program supports Treasury and agency debt market function by providing a secondary and temporary source of securities to the broader market through the Fed’s trading counterparties, the primary dealers. Importantly, the size and composition of the SOMA portfolio reflect past monetary policy decisions, limiting the program's ability to help alleviate all collateral shortages. In this post, we provide a brief history of the Fed’s securities lending program and describe recent trends in activity and what is driving them.
Keywords: Federal Reserve; Securities Lending; Treasury securities;
JEL Classification: G1;
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Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Liberty Street Economics
Publication Date: 2016-08-17
Number: 20160817