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Credit and Liquidity Programs and the Balance Sheet: Crisis response

Board of Governors of the Federal Reserve System

Claims Supported by This Source

  1. In response to the financial crisis that emerged in the summer of 2007, numerous programs were implemented to support the liquidity of financial institutions and improve market conditions, which significantly altered the balance sheet.
  2. The tools fall into three groups: (1) Short-term liquidity as lender of last resort (Discount Window, TAF, PDCF, TSLF), and currency swaps with foreign central banks (as bank funding markets are global).
  3. (2) Direct liquidity to borrowers and investors in key credit markets (CPFF, AMLF, MMIFF, TALF).
  4. (3) As an expansion of open market operations, purchased long-term securities, putting downward pressure on long-term interest rates. From September 2012, purchased $40 billion of MBS per month; from January 2013, $45 billion of long-term Treasury securities per month. Tapering began in January 2014, and the program ended in October 2014.

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