Yale School of Management

Posts by Emergency Liquidity

How Available Is the ESF for New Fed Facilities?

January 12, 2021
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, it allocated $500 billion to the Exchange Stabilization Fund (ESF), $454 billion of which was for the Treasury Secretary to support Federal Reserve lending facilities. The Secretary committed $195 billion of these funds to provide credit support to some of the programs the Fed set up under its Section 13(3) emergency lending authority. The Consolidated Appropriations Act, 2021 signed into law on December 27 definitively closed these facilities and rescinded funds “not needed to meet the commitments, as of January 9, 2021, of the programs and facilities established.” Continue reading “How Available Is the ESF for New Fed Facilities?”

Chile’s Central Bank Injects Liquidity in Financial Markets

December 10, 2020
In March, the central bank of Chile (CBC) cut interest rates twice from 1.75% to 0.5% and unveiled a series of liquidity measures to “ensure the normal functioning of credit markets and the effective transmission of the increased monetary stimulus.” The CBC expanded its exceptional measures in June by an additional 10% of GDP. The current CBC liquidity injection represents 20% of GDP. Continue reading “Chile’s Central Bank Injects Liquidity in Financial Markets”

Despite Stated Exclusion, the Fed Is Buying Bank Debt

September 21, 2020
The Federal Reserve has said it won’t directly buy bonds issued by banks as part of its COVID financial rescue facilities. But a close review of its holdings reveals that by buying exchange traded funds, it has indirectly bought $2 billion of bank bonds—over 15% of its total corporate bond holdings. Continue reading “Despite Stated Exclusion, the Fed Is Buying Bank Debt”