Yale School of Management

Program on Financial Stability blog

RBI reinforce liquidity measures while keeping the interest rate constant

October 21, 2020
At its most recent monetary policy meeting, the Reserve Bank of India reinforced a number of measures to fight against shocks caused by COVID-19. The measures to ease liquidity issues include (i) establishment of On Tap Targeted Long-Term Repo Operations (TLTRO), (ii) extension of Statutory Liquidity Ratio (SLR) Holdings in the Held To Maturity (HTM) category, and (iii) adjustments in Open Market Operations (OMOs) to purchase State Development Loans and increase the overall purchase amount. Continue reading “RBI reinforce liquidity measures while keeping the interest rate constant”

As Need for Additional Small Business Aid Intensifies, Preliminary Evaluations of the PPP Suggest It Improved Business Survival

October 21, 2020
A central component of the initial fiscal response to the Covid-19 pandemic, the Paycheck Protection Program (PPP) was designed to support small businesses in the United States. It launched on April 3 after Congress signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27, initially allocating $349 billion for the forgivable loan program. Congress later increased funding by $310 billion, bringing total funding to $659 billion. When the PPP closed for applications on August 8, it had provided $525 billion in support through more than 5.2 million loans.  Continue reading “As Need for Additional Small Business Aid Intensifies, Preliminary Evaluations of the PPP Suggest It Improved Business Survival”

Disagreements over the Municipal Liquidity Facility Erupt

October 21, 2020
The Congressional Oversight Commission (COC) released its fifth report on October 21, twenty-five days after the report was legally required to be distributed. The report focuses on the Municipal Liquidity Facility (MLF) established by the Federal Reserve (Fed), which was  the subject of a COC hearing on September 17. The MLF, established by the Fed under its emergency authority under Section13(3) of the Federal Reserve Act, was announced on April 9 and became operational on May 26.  The program is designed to provide liquidity to states and municipalities by purchasing up to $500 million of bonds issued by these entities. Thus far the program has only purchased two notes, issued by the State of Illinois and the New York Metropolitan Transportation Authority (MTA). A number of commenters view the program as inaccessible and various legislators, including Senator Elizabeth Warren, have urged the Fed to amend the terms of the program to make it more available to the states and municipalities that are its intended participants and which are currently struggling with the effects of the pandemic on revenue.  Continue reading “Disagreements over the Municipal Liquidity Facility Erupt”