Federal Reserve and other central banks announce measures designed to address elevated pressures in short-term funding markets (December 12, 2007)

Claims Supported by This Source

1. Established the Term Auction Facility (TAF). To supply term funds to depository institutions through an auction process against the same broad range of collateral as the discount window. Fully collateralized.
2. The first auction was on December 17, 2007, for $20 billion (28-day term, maturing January 17, 2008), the second on December 20 for up to $20 billion (35-day term). The third and fourth were on January 14 and 28. The minimum bid rate was the OIS rate for the same term.
3. The FOMC authorized temporary currency swap lines (up to 6 months) with the ECB and the SNB. The limits were $20 billion for the ECB and $4 billion for the SNB.
4. Aimed to help liquidity circulate by injecting term funds with a broader range of counterparties and collateral than open market operations when the unsecured interbank market is under strain. The background was the stigma associated with borrowing from the discount window.

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