Yale School of Management

Posts by Market 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 The Consolidated Appropriations Act, 2021 signed into law on December 27 definitively closed these facilities and rescinded funds “not needed to meet the commitments, as of January 9, 2021, of the programs and facilities established.”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?”

Use of Federal Reserve Programs – 01/06/2021

January 11, 2021
Below we report on operational Fed programs, based on the Fed’s weekly H.4.1 release. Since our last report, the use of lending facilities has increased to $94.8 billion. The use of the Main Street Lending Facility (MSF) surged before it, along with the other CARES ACT facilities, ceased new lending at the end of the year. The outstanding amount of the Fed’s U.S. dollar swap lines expanded to the end of the year, then dropped.  Continue reading “Use of Federal Reserve Programs – 01/06/2021”

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”

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”

"Prioritizing Wall Street": Report by Select Subcommittee on Fed’s Corporate Bond Purchases

September 24, 2020
On September 23, the United States House of Representatives Select Subcommittee on the Coronavirus Crisis released a report investigating corporate bond purchases by the Federal Reserve (Fed) in response to the economic downturn caused by COVID-19. Continue reading “"Prioritizing Wall Street": Report by Select Subcommittee on Fed’s Corporate Bond Purchases”