The Fed's standing repo facility is getting its first real test. The idea is simple: banks swap Treasuries for overnight cash from the Fed, keeping repo rates from spiking above the target range. A rate ceiling, basically. Problem? Institutions are reluctant to use it. Execs say they're worried about stigma—the same reputational concern that's plagued the discount window for decades. Nobody wants to look like they need the Fed's help. And they have reason for doubts: In September, the Fed's vice chair for supervision suggested the SRF should charge higher rates to discourage routine use. Her comments weren't received well by people who want to get banks to actually use the thing. Repo rates are firming again around Treasury settlements this week. Year-end balance-sheet clean up, which tightens funding markets, is coming. The Fed is ending Treasury runoff (QT), but if banks won't touch the SRF when they need it, the Fed's rate ceiling has a hole in it. https://www.wsj.com/economy/central-banking/the-feds-tool-for-calming-short-term-funding-markets-is-being-tested-63a32795?st=V2CNv9&reflink=desktopwebshare_permalink(Nick Timiraos)