Dallas Fed President Lorie Logan on Central Clearing
At a conference on market liquidity issues organized by the New York Federal Reserve, Dallas Federal Reserve Bank President Lorie Logan stated that moving to central clearing for the Federal Open Market Committee’s open market operations could make those operations more efficient and effective, and would support the overall strength of U.S. financial markets. Logan emphasized that her comments did not address the monetary‑policy or economic outlook.
She referred specifically to the Fed’s standing repo facilities, which lend cash to eligible firms as needed to keep money‑market rates at target levels. Although the Fed encourages the use of standing repos, their utilization has been limited. Logan noted that some market observers believe a simpler, centrally‑cleared clearing process could make standing repo operations more attractive to participants.
In addition, Logan highlighted the need for careful management of borrowing levels in the markets, stating that maintaining strong and efficient financial markets requires both market participants and the official sector to appropriately balance the benefits and risks of leverage and its interaction with market liquidity.