The Fed’s expanded offerings of liquidity to the financial system saw strong demand Thursday from eligible banks. The Federal Reserve Bank of New York intervened twice Thursday morning with what is called an overnight repurchase-agreement operation and via a 14-day repo operation. WSJ explains how this critical, but murky part of the financial system works, and why some banks say the crunch could have been prevented. The Thursday overnight repo operation was much bigger than the one-day operation Wednesday, where the Fed added $49.845 billion in one-day liquidity. The bill purchases permanently add reserves to the financial system and are seen as a more-enduring fix for potential market volatility.

Source: Wall Street Journal October 24, 2019 13:41 UTC