Regardless of what the Fed ends up doing, there may be a short-term solution to address funding stress. Credit Suisse Group AG analyst Zoltan Pozsar has proposed that the central bank limit usage of its foreign reverse repo facility -- currently about $250 billion -- where central banks invest cash at the New York Fed at a rate that is comparable to market-based rates. A cap, Pozsar wrote last month, would ease quarter-end pressures and let the Fed get a new facility right.
“It’s a solution that buys time,” Pozsar said in a phone interview.
This article provided by Bloomberg News.