Q.What is the Fed's reverse repo facility?

It is now nearly empty: $200 million from one firm on October 23, 2026. That drain mattered more than it sounds. The facility was the cushion that let the Fed shrink its balance sheet by $2.4 trillion without squeezing banks, and once the cushion was gone, quantitative tightening had to stop.

Key numbers

Download the data (CSV): the daily balance and award rate since the first test operation in September 2013.

How a reverse repo works, step by step

"Repo" is short for repurchase agreement. It is a loan dressed up as a sale. From the money fund's side:

1. Between 12:45 and 1:15 p.m. ET each business day, the fund tells the New York Fed's trading desk how much cash it wants to place, up to $160 billion.
2. The Fed "sells" it Treasury securities from its own portfolio and takes the cash.
3. The next business day the Fed buys them back for slightly more. The difference is interest at the offering rate.
4. The cash leaves the banking system while it sits there. On the Fed's balance sheet it moves from bank reserves to a separate reverse repo line.

The "reverse" is from the Fed's point of view: the Fed is the one borrowing cash. When the Fed lends cash against securities, that is a plain repo, and it offers that too, through its standing repo facility.

The facility's job is that floor. Banks earn 3.90% on reserves, but money funds cannot hold reserves, so without the facility they might dump cash into the market at lower rates and drag short-term rates below the Fed's target. The New York Fed ran the first test on September 23, 2013, with an operational exercise that took in $11.8 billion.

Why $2.55 trillion piled up

In 2021 the system was flooded with cash: the Fed was buying $120 billion of bonds a month, and the Treasury spent its cash account down from $1.67 trillion in January to $278 billion by September, pushing that money out into the system. Funds had more cash than safe places to put it. On June 17, 2021 the Fed nudged the offering rate from 0% to 0.05% (implementation note), and the facility jumped from $521 billion to $756 billion in one day. By the end of 2021 it held $1.9 trillion.

Why it drained to almost nothing

Two forces pulled the money back out:

• Treasury bills paid more. After the June 2023 debt ceiling deal the Treasury rebuilt its cash account from $45 billion (June 7) to $681 billion (September 27), mostly by selling short-term bills. When bills pay more than the Fed's floor, a money fund buys them instead of parking at the Fed; on October 22, 2026 the 3-month bill yielded 4.22% against the facility's 3.75%. The facility fell from $2.16 trillion on June 1, 2023 to $705 billion by January 2, 2024.
• QT drained the system. From June 2022 to December 2025 the Fed let $2.4 trillion of bonds run off. About $1.96 trillion of that drain came out of this facility and only $464 billion out of bank reserves. The full breakdown is in what quantitative tightening is.

It first dropped under $1 billion on November 18, 2025. The Fed ended QT on December 1, 2025: with the cushion gone, every further dollar of runoff would have come straight out of bank reserves.

Common misconceptions

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FAQ

What is the reverse repo facility in simple terms?

It is a place where money market funds and a few other firms can lend cash to the Federal Reserve overnight. The Fed hands over Treasury securities as collateral, buys them back the next morning, and pays interest at a rate it sets, 3.75% since September 17, 2026.

Who uses the Fed's reverse repo facility?

Mostly money market funds. On the record day, December 30, 2022, 113 firms parked $2.554 trillion, and money funds supplied $2.340 trillion of it, about 92%. Fannie Mae, Freddie Mac and the Federal Home Loan Banks added $154 billion, primary dealers $59 billion and banks $1.5 billion.

How much is in the reverse repo facility today?

Almost nothing. On October 23, 2026 one firm placed $200 million. Use still spikes at quarter ends, when banks pull back from repo markets: $26.9 billion on June 30, 2026 and $11.5 billion on September 30, 2026.

Why did the reverse repo facility drain?

Because money funds found better places for the cash. From mid 2023 the Treasury sold large amounts of short-term bills that paid more than the Fed's reverse repo rate, and funds moved their money into those bills. At the same time quantitative tightening was pulling money out of the system, and the reverse repo pile absorbed most of that drain.

Is a reverse repo the Fed lending money?

No, it is the opposite. In a reverse repo the Fed borrows cash and pledges securities. In a regular repo, like the Fed's standing repo facility at 4.00%, the Fed lends cash against securities. The two rates form the bottom and top of the Fed's target range.

Sources

All checked October 24, 2026.

Primary (Federal Reserve and New York Fed)

• Federal Reserve Bank of New York, FAQs: Reverse Repurchase Agreement Operations (updated Sep 16, 2026): schedule, $160 billion counterparty limit, 3.75% offering rate, eligible counterparties, balance sheet treatment.
• Federal Reserve Bank of New York, Reverse Repo Operations and the Markets Data API: results for Dec 30 2022 (113 counterparties, $2.554T, 4.30%, by counterparty type), Jun 30 2026, Sep 30 2026 and Oct 23 2026.
• Federal Reserve Bank of New York, Statement Regarding Overnight Fixed-Rate Reverse Repurchase Agreement Operational Exercise (Sep 20, 2013).
• Federal Reserve, implementation note of June 16, 2021: offering rate raised to 0.05%, $80 billion per-counterparty limit, $80B + $40B monthly purchases.
• Federal Reserve, implementation note of September 16, 2026: reserve balances 3.90%, standing repo 4.0%, reverse repo 3.75%, target range 3.75% to 4%.
• Federal Reserve Bank of New York, Effective Federal Funds Rate: 3.88% on Oct 22, 2026.

Data series (FRED)

• RRPONTSYD overnight reverse repos, RRPONTSYAWARD award rate, WTREGEN Treasury General Account, DGS3MO 3-month bill yield, SOFR.

Our data and math

• data.csv: daily balance and award rate since Sep 23, 2013. Money funds' share (2.340 / 2.554 = 92%) and the annual interest cost (2.554T x 4.30% = about $110B) are our math. QT drain split from our quantitative tightening explainer (Fed H.4.1 via FRED).

Images

• Hero and counterparty chart: rendered by Tensorust with the Proof Engine from New York Fed data.
• Rate corridor diagram: Tensorust, from the Fed implementation note and New York Fed rates.