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

Odaily Planet Daily 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, and enhance the stability of U.S. financial markets. Logan noted that such an arrangement could improve the use of Federal Reserve tools, such as the standing repo facility. This tool is designed to provide liquidity to eligible financial institutions, but market usage remains relatively low. She also said that market leverage levels need to be carefully managed, and financial markets must maintain an appropriate balance between the benefits and risks of leverage, as well as between leverage and liquidity.