Yale School of Management

Posts by Market Liquidity

Bank of Japan Increases Liquidity Measures

May 26, 2020

On May 22, the Bank of Japan (BOJ) extended and expanded its “Special Program to Support Financing in Response to the Novel Coronavirus (COVID-19)” to 75 trillion yen (about $700 billion). This includes three programs: (1) $186 billion in Outright Purchases of Commercial Paper and Corporate Bonds, (2) $233 billion for the Special Funds-Supplying Operations, and (3) $279 billion for the recently launched New Fund-Provisioning Measure to support small and medium-sized enterprises. The duration of the measures was extended by six months from September 30, 2020 to March 31, 2021. On March 16, the BoJ had announced emergency measures to facilitate corporate financing that included the first two measures (For details on the third measure, see this YPFS blog post). 

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FHFA Allows Federal Home Loan Banks to Take PPP Loans as Collateral

May 8, 2020

On April 23, the FHFA announced that Federal Home Loan Banks (FHLBs) could take Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration as collateral for their advances providing some financial institutions two channels through which to finance such loans.

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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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