NEW YORK—The Federal Reserve Bank of New York today released a special issue of its Economic Policy Review that describes the actions and liquidity facilities stood up by the Federal Reserve, along with other players in the official sector, in response to the economic dislocations brought about by the COVID-19 pandemic. This volume offers background on the market conditions that led to the establishment of the facilities, details on their design, and assessments of their impact.
The volume covers the following facilities and programs:
- The Commercial Paper Funding Facility (CPFF);
- The Fed’s Central Bank Swap Lines and FIMA Repo Facility;
- The Federal Reserve’s Market Functioning Purchases;
- The Main Street Lending Program (MSLP);
- The Money Market Mutual Fund Liquidity Facility (MMLF);
- The Municipal Liquidity Facility (MLF);
- The Paycheck Protection Program Liquidity Facility (PPPLF);
- The Primary Dealer Credit Facility (PDCF);
- The Primary and Secondary Corporate Credit Facilities (PMCCF and SMCCF, together the CCFs); and
- The Term Asset-Backed Securities Loan Facility (TALF).
Nine of the ten research articles in this issue were published in the New York Fed’s Staff Reports working paper series in conjunction with the Bank’s September 2021 conference on the “Implications of Federal Reserve Actions in Response to the COVID-19 Pandemic,” which featured panelists from the New York Fed, the Federal Reserve Board, the European Central Bank, the Bank for International Settlements, the U.S. Treasury, and several academic institutions. The tenth article in this volume, “The Federal Reserve’s Market Functioning Purchases,” was published as a Staff Report in December 2021.
Specifically, the articles in this volume:
- provide an overview of the CCFs, detailing the facilities’ design, their operation and usage, and their impact on corporate bond markets;
- describe how the MLF contributed to a healing in the municipal securities market as a whole;
- detail the goals and design of the MSLP, the challenges and constraints of the facility, and the characteristics of its borrowers and lenders;
- highlight evidence on how the Fed’s Central Bank Swap Lines and FIMA Repo Facility can reduce strains in global dollar funding markets and U.S. Treasury markets during extreme stress events;
- describe the CPFF and its impact on commercial paper markets;
- provide an overview of new PDCF and how it compares to the 2008 version;
- show how the MMLF was an important tool in stemming investor outflows from money market funds and in restoring calm in short-term funding markets;
- illustrate how the TALF works, how much it was used, and its effect on the issuance and spreads of TALF-eligible securities relative to those of TALF-ineligible securities;
- outline the background and rationale for the creation of the PPPLF and analyze the facility’s loan take-up; and
- assess the rationale, operations, and implications of the Federal Reserve’s Market Functioning Purchases.
The ten articles in the volume are:
“The Primary and Secondary Corporate Credit Facilities”
By Nina Boyarchenko, Caren Cox, Richard K. Crump, Andrew Danzig, Anna Kovner, Or Shachar, and Patrick Steiner
“The Municipal Liquidity Facility”
By Andrew Haughwout, Ben Hyman, and Or Shachar
“The Main Street Lending Program”
By David Arseneau, José Fillat, Molly Mahar, Donald P. Morgan, and Skander Van den Heuvel
“The Fed’s Central Bank Swap Lines and FIMA Repo Facility”
By Mark Choi, Linda S. Goldberg, Robert Lerman, and Fabiola Ravazzolo
“The Commercial Paper Funding Facility”
By Nina Boyarchenko, Richard K. Crump, Anna Kovner, and Deborah Leonard
“The Primary Dealer Credit Facility”
By Antoine Martin and Susan McLaughlin
“The Money Market Mutual Fund Liquidity Facility”
By Kenechukwu Anadu, Marco Cipriani, Ryan M. Craver, and Gabriele La Spada
“The Term Asset-Backed Securities Loan Facility”
By Elizabeth Caviness, Asani Sarkar, Ankur Goyal, and Woojung Park
“The Paycheck Protection Program Liquidity Facility”
By Desi Volker
“The Federal Reserve’s Market Functioning Purchases”
By Michael J. Fleming, Haoyang Liu, Rich Podjasek, and Jake Schurmeier
