# Overnight Reverse Repo Facility The **overnight reverse repurchase agreement facility (ON RRP)** lets money market funds, government-sponsored enterprises, and other institutions that hold no Federal Reserve account lend cash to the Fed overnight against Treasury collateral, at a rate the Fed sets. It is the **floor** of the interest-rate corridor: no rational lender accepts less in the private repo market than the Fed will pay risk-free. The facility matters structurally because [[Interest on Reserve Balances]] is available only to banks. Without ON RRP, the large non-bank cash pools that dominate today's money markets could lend below IORB and drag the effective federal funds rate out of the target range. The two rates together are what make an [[Ample Reserves]] regime work without rationing reserves. ## Counterparties and limits Eligible counterparties are money market funds operating under SEC Rule 2a-7, government-sponsored enterprises such as [[Fannie Mae]], [[Freddie Mac]] and the Federal Home Loan Banks, primary dealers, and banks. Each may submit one bid per operation, up to **$160 billion**, at or below the offering rate. The New York Fed began the facility as an operational exercise in September 2013, as the Fed prepared to lift rates off zero with a balance sheet far too large for the old scarce-reserves method — the origin of the [[Ample Reserves]] framework. ## Boom and drain | Date | Daily take-up | Context | |---|---|---| | Dec 30, 2022 | **$2.554 trillion** (record) | Pandemic-era cash glut; money funds with too few Treasury bills to buy | | Sept 2024 | below $250 billion | Funds shifting into bills after the 2023 debt-ceiling resolution | | Dec 2024 | below $100 billion | | | July 20, 2026 | $30 million, six counterparties | Near zero | | Oct 5, 2026 | about $1 billion | Near zero | The rise reflected too much cash chasing too few safe short-term assets; the drain was the mirror image. After the June 2023 debt-ceiling deal the Treasury rebuilt its [[Treasury General Account]] with heavy bill issuance, money funds moved out of the facility into bills, and the first stretch of [[Quantitative Tightening]] drew down ON RRP balances rather than [[Bank Reserves]]. With that buffer gone, the FOMC judged at its December 2025 meeting that reserves had reached ample levels and moved to reserve-management bill purchases. The Fed's July 2026 Monetary Policy Report described ON RRP usage as "near zero on most days." ## The 2026 rate The offering rate sits at the bottom of the target range. Under the September 16, 2026 implementation note it rose to **3.75 percent**, effective September 17, alongside [[Interest on Reserve Balances]] at 3.90 percent and the [[Standing Repo Facility]] at 4.00 percent — the corridor around the new 3.75–4.00 percent target. Near-zero take-up makes the facility idle, not irrelevant: the rate still sets the floor for money-fund lending, and balances would refill if bill supply shrank or reserves became abundant again. ## See also - [[Monetary Policy Transmission Flow]] · [[Interest Rate Policy Timeline]] - [[Interest on Reserve Balances]] · [[Standing Repo Facility]] · [[Ample Reserves]] · [[Discount Window]] - [[Quantitative Tightening]] · [[Quantitative Easing]] · [[Treasury General Account]] · [[Shadow Banking]]