Raoul Pal: The Federal Reserve may be forced to adjust its policy this week to avoid a funding crisis.

Raoul Pal, writing on the X platform, stated that the Federal Reserve may be forced to adjust its policy this week to avoid a month-end and year-end funding crisis. The current cryptocurrency trading situation reflects tight liquidity, while the stock market is temporarily supported by buybacks and earnings chasing, but if the problem is not resolved immediately, there is a risk of a repeat of the 2018/19 situation. The Fed has met with banks and the New York Fed to understand why the SRF (Standing Repo Facility) is not being fully utilized. Market and Fed concerns are intensifying. The bigger game now is that the Treasury wants to control liquidity through banks, while the Fed prefers QE. Liquidity management has become a political game, rather than a simple monetary policy issue. The market will continue to fluctuate this week until the problem is resolved. A temporary solution may soon be rolled out through buybacks/SRFs, while the ultimate solution, adjusting the eSLR (Enhanced Supplemental Leverage), is becoming increasingly urgent.