Yale School of Management

Posts by Market Liquidity

U.S. Bank Regulators Modify Liquidity Regulation to Support Participation in Fed Programs

May 7, 2020

On May 5, U.S. bank regulators issued an interim final rule modifying the Liquidity Coverage Ratio (LCR) to support banks’ use of the Paycheck Protection Program Liquidity Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF). 

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Use of Federal Reserve Programs

May 7, 2020

The Federal Reserve recently announced a number of lending facilities, based on programs first implemented during the Global Financial Crisis of 2007-09. This post provides an update on the use of Fed lending programs since April 16. It also introduces the Fed’s newest lending facility, the Paycheck Protection Program Liquidity Facility (PPPLF); discusses international use of the Fed’s liquidity swap lines; and provides an overview of similar lending programs in Europe and the United Kingdom. Our previous post on the early use of Fed programs is available here

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Early Use of Federal Reserve Programs

April 22, 2020

After the COVID-19 crisis began, the Federal Reserve quickly announced a number of emergency lending facilities, largely based on programs it first introduced during the Global Financial Crisis of 2007-09 (GFC). These programs have varied in size and speed of implementation. Bank reserve balances at the Fed have reached a historic high in recent weeks, exceeding $3 trillion for the first time, suggesting banks could lend much more.

This post discusses the early use of the following Fed lending programs: (1) primary credit through the discount window, (2) central bank swap lines and FIMA repos, (3) the Money Market Mutual Fund Liquidity Facility (MMLF), (4) the Primary Dealer Credit Facility (PDCF), and (5) the Commercial Paper Funding Facility (CPFF). 

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Bank of Canada Establishes Series of Programs to Promote Market Liquidity

April 13, 2020

Since the beginning of April, the Bank of Canada (BoC) has launched three market-liquidity programs. Two are new asset purchase programs, under which it will buy commercial paper and government bonds. The third is an activation of a standing repurchase agreement (repo) facility to get cash to market participants.

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