Money & Finance › Money flows around the world › Dollar plumbing: bank reserves, the TGA and the Fed's reverse repo
The Fed's overnight reverse repo facility (ON RRP)
Peak $2.55T Dec 2022; near zero 2025· Institution or agency
Fact, law or dataA rule, statute, definition or measured number.
A Fed program in which money funds and others lend cash to the Fed overnight, against Treasuries, at a set rate.
See it on the Money & Finance map →How it works
Eligible firms, mostly money market funds plus Fannie Mae, Freddie Mac, the Federal Home Loan Banks and dealers, can lend cash to the New York Fed each night. The Fed hands over Treasuries as collateral and pays the RRP rate, set at the bottom of the fed funds target range. Tested from 2013, it became a core tool in 2015. Usage hit $2.55 trillion on December 30, 2022, when funds had more cash than T-bills to buy, then fell to near zero by late 2025.
Why it matters
It sets a floor under short-term rates, and it held a giant pool of excess cash that later drained into T-bills, keeping QT orderly.
Think of it like
Like an overflow lot the Fed opens when downtown garages fill: it absorbs the excess at a posted rate.
Facts, rules and data
The New York Fed publishes each day's total, rate and number of participants; FOMC implementation notes set the rate and the $160 billion per-firm cap.
Debates and risks
Whether a near-empty facility still matters, and whether it should be shrunk, repriced or kept as a backstop, is debated.
Connections (3)
▸The Fed's overnight reverse repo facility (ON RRP) took in up to $2.55 trillion from Cash and money market fundsFact, law or data
The connection
In 2021–22, pandemic stimulus and Fed bond buying left money market funds with more cash than T-bills to buy. Rather than accept near-zero private rates, they lent overnight to the Fed at the RRP rate. Usage peaked at $2.55 trillion on December 30, 2022. Investors in government money funds were, in effect, lending to the Fed.
When and why
Peaked December 30, 2022; the biggest users were large fund families plus government-sponsored enterprises such as the Federal Home Loan Banks.
How we know
New York Fed daily operation results and money funds' monthly holdings reports to the SEC (Form N-MFP).
Debates and risks
Whether the facility pulled deposits away from banks, adding to the 2023 regional bank stress, is debated.
▸The Fed's overnight reverse repo facility (ON RRP) puts a floor under rates in The repo market: overnight loans backed by TreasuriesFact, law or data
The connection
A money fund can always lend to the Fed overnight at the RRP rate, set at the bottom of the fed funds range, so it will not lend to a dealer in the private repo market for less. That keeps repo rates and SOFR from sinking below the Fed's range, while the standing repo facility caps them from above.
When and why
Since the Fed's December 2015 rate liftoff, run daily by the New York Fed's trading desk.
How we know
New York Fed data show private repo rates have rarely traded far below the RRP rate since the facility became a policy tool.
Debates and risks
With little cash left in the facility, its floor matters less, and how repo rates behave as reserves tighten is an open question.
▸The Fed's overnight reverse repo facility (ON RRP) drained as money funds switched into Treasury bills (T-bills)Fact, law or data
The connection
After the June 2023 debt-ceiling deal, Treasury sold over $1 trillion of new T-bills at yields slightly above the RRP rate. Money funds moved cash out of the Fed and into bills. The facility drained from over $2 trillion in mid-2023 to near zero by late 2025, letting QT proceed without draining bank reserves.
When and why
June 2023 through late 2025, sped up by heavy bill sales after the July 2025 debt-limit increase.
How we know
New York Fed RRP totals, Treasury auction data, and ICI and SEC data on money fund holdings.
Debates and risks
Whether the facility could refill if bill supply shrinks or the Fed buys more bills is uncertain.