Japan says it will borrow dollars against its Treasuries, and it was Washington that asked first for the ceiling to be lifted

The US Treasury Secretary has publicly asked the Federal Reserve to enlarge one of its windows. It is the FIMA repo window, where foreign central banks pledge the US Treasuries they already own and borrow dollars against them.

Bessent ready to repeat joint yen intervention, urges bigger Fed backstop (Reuters, 2026-08-02)

출처: ca.finance.yahoo.com

Reuters carried the post Scott Bessent put on X on August 2. One line in it reads that the FIMA Repo Facility is an important backstop and that he would encourage it to be upsized in the coming months. In the same post he said Treasury would not hesitate to take part in further joint intervention. It was the lender, not the borrower, who asked first for the ceiling to be lifted.

Why not simply sell the bonds

Making the yen stronger means selling dollars and buying yen. The question is where those dollars come from. Until now Japan's method was to sell the US Treasuries it holds into the market. Selling bonds pushes their price down, and a lower price means a higher yield. That long yield is the number Washington watches most closely. The joint intervention of July 31 did not use that method. The Treasury sold euros sitting in its Exchange Stabilization Fund and bought yen with them, so no US government bonds reached the market.

Japan and US confirm rare joint intervention to prop up yen (Al Jazeera, 2026-08-03)

출처: aljazeera.com

According to Al Jazeera, Japan's finance ministry confirmed the operation, saying it had countered excessive volatility and disorderly movements in the yen, and added that it would not hesitate to conduct further joint intervention. After the operation the yen firmed to around 155 per dollar, its strongest in nearly three months. The part about Japan planning to use the FIMA window comes from the original post, and English language reporting has not confirmed it yet.

Collateral is abundant, the ceiling is not

There is no shortage of bonds to pledge. What is capped is the amount that can actually be drawn, a little above five percent of that collateral. Al Jazeera reported that Tokyo may have spent around $59bn in this intervention. If that estimate holds, a single operation nearly empties one country's window.

The Fed, not the Treasury, holds the switch

Establishment of the standing FIMA repurchase agreement facility (Federal Reserve, 2021-07-28)

출처: federalreserve.gov

The window opened as a temporary measure in March 2020 and became a standing facility in July 2021. The terms the Fed published then include a limit of $60 billion per counterparty. Changing those terms requires approval from the Federal Open Market Committee. However strongly a Treasury Secretary recommends it, the decision is made inside the central bank. One thing sits in the way. FIMA repo is a device that enlarges the Fed's balance sheet. When Japan pledges bonds and draws dollars, those bonds land on the Fed's asset side while the newly created dollars land on the liability side. Chair Kevin Warsh has made shrinking that balance sheet his stated priority. The expansion here is temporary, unwinding as the dollars are repaid, so some argue the resistance may be smaller than it looks.

The choice in front of Warsh this August

What is now at issue is not whether Japan has ammunition left, but whether the Fed opens the ceiling. If the limit rises, Japan can keep intervening without selling bonds, and the ceiling on defending the yen is set by Washington's approval rather than by Japan's reserves. If it stays, intervention goes back to selling Treasuries, and the US long yield pays for it. Once defending a currency becomes a joint enterprise of two governments, reading the yen from Tokyo alone stops being enough.