Fed's Logan: Voluntary Central Clearing Mechanism Could Improve Open Market Operation Efficiency

Odaily News: Dallas Fed President Lorie Logan stated that if the Federal Open Market Committee conducts open market operations through a voluntary central clearing mechanism, it would help improve operational efficiency and effectiveness, while enhancing the stability of U.S. financial markets. Logan noted that such arrangements could improve the use of Fed tools, such as the Standing Repo Facility. This tool is designed to provide liquidity to eligible financial institutions, but its market usage remains relatively low at present. She also said that market leverage levels need to be carefully managed, and that financial markets must maintain an appropriate balance between the benefits and risks of leverage, as well as between leverage and liquidity.