1/The Fed and FOMC is proactive trying to stave off a credit collapse. Successful so far this is a thread of what steps the Fed has done to date:
Note: This list is not all encompassing, some specific policies are in separate implementation notes.
Note: This list is not all encompassing, some specific policies are in separate implementation notes.
2/March 3, 2020:
Lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4%.
> Post G7 Conference Call
Lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4%.
> Post G7 Conference Call
4/March 12, 2020
> Expand 60B TRMRP to all maturities (coupons)
> $500B 3mos Term REPO offered weekly
> $500B 1mos Term REPO offered weekly
> $175B Daily O/N REPO offer
> $45B 2week Term REPO offer twice weekly
> Expand 60B TRMRP to all maturities (coupons)
> $500B 3mos Term REPO offered weekly
> $500B 1mos Term REPO offered weekly
> $175B Daily O/N REPO offer
> $45B 2week Term REPO offer twice weekly
4/March 15, 2020:
> FOMC Policy Meeting 72hrs early
> Lower the federal funds rate to 0 to 1/4%
> Increase holdings of Treasuries by at least $500B and agency mortgage-backed securities by at least $200B
> FOMC Policy Meeting 72hrs early
> Lower the federal funds rate to 0 to 1/4%
> Increase holdings of Treasuries by at least $500B and agency mortgage-backed securities by at least $200B
5/March 15, 2020:
The Federal Reserve encourages depository institutions to turn to the discount window to help meet demands for credit from households and businesses
> Lower the primary credit rate by 150 bps to 0.25 percent (Disc Window <= FF)
The Federal Reserve encourages depository institutions to turn to the discount window to help meet demands for credit from households and businesses
> Lower the primary credit rate by 150 bps to 0.25 percent (Disc Window <= FF)
6/March 15, 2020:
BOC, BOE, BOJ, ECB, and SNB U.S. $ liquidity swap agreements.
> CB's lower pricing on the standing U.S. dollar liquidity swap arrangements by 25 basis points, the new rate is the U.S. dollar overnight index swap (OIS) rate +25 bps
BOC, BOE, BOJ, ECB, and SNB U.S. $ liquidity swap agreements.
> CB's lower pricing on the standing U.S. dollar liquidity swap arrangements by 25 basis points, the new rate is the U.S. dollar overnight index swap (OIS) rate +25 bps
7/March 16, 2020:
The federal bank regulatory agencies release a statement encouraging banks to use the Federal Reserve's "discount window" so that they can continue supporting households and businesses.
>Remove 'stigma' of the discount window
The federal bank regulatory agencies release a statement encouraging banks to use the Federal Reserve's "discount window" so that they can continue supporting households and businesses.
>Remove 'stigma' of the discount window
8/March 17, 2020:
Announce 2 actions allowing banks to continue lending.
> Encouraging banks to use their resources to support households and businesses
> A technical change to phase in automatic distribution restrictions gradually if a firm's capital levels decline.
Announce 2 actions allowing banks to continue lending.
> Encouraging banks to use their resources to support households and businesses
> A technical change to phase in automatic distribution restrictions gradually if a firm's capital levels decline.
9/March 17, 2020:
Establish Commercial Paper Funding Facility (CPFF).
> $10B Treasury credit protection
> Up to $1T Special Purpose Vehicle (SPV)
> Recourse
> Unsecured and Asset Backed CP A1/P1
Establish Commercial Paper Funding Facility (CPFF).
> $10B Treasury credit protection
> Up to $1T Special Purpose Vehicle (SPV)
> Recourse
> Unsecured and Asset Backed CP A1/P1
10/March 17, 2020:
Add'l afternoon REPO
> 1:30ET - 1:45ET $500B offered daily
> Daily O/N morning REPO ⬆️$500B
Add'l afternoon REPO
> 1:30ET - 1:45ET $500B offered daily
> Daily O/N morning REPO ⬆️$500B
11/March 17, 2020:
Establish Primary Dealer Credit Facility (PDCF)
> O/N and Term Funding up to 90d
> Collateral: IG debt, CP, Muni's, Equities👀
> Primary Credit Rate or Discount Rate
Establish Primary Dealer Credit Facility (PDCF)
> O/N and Term Funding up to 90d
> Collateral: IG debt, CP, Muni's, Equities👀
> Primary Credit Rate or Discount Rate
12/March 18, 2020
> Money Market Liquidity Facility (MMLF)
> Secured/Unsecured CP
> Treasury and Agency Securities
> Additional rules March 19, 2020
> Money Market Liquidity Facility (MMLF)
> Secured/Unsecured CP
> Treasury and Agency Securities
> Additional rules March 19, 2020
13/March 19, 2020
> Established add'l $ swap lines with:
> Australia, Brazil, Denmark, Korea, Mexico, Norway, New Zealand, Singapore, Sweden
> Initial Term - 6 Months
> Established add'l $ swap lines with:
> Australia, Brazil, Denmark, Korea, Mexico, Norway, New Zealand, Singapore, Sweden
> Initial Term - 6 Months
14/March 20, 2020
To improve the swap lines' effectiveness in providing U.S. dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily.
To improve the swap lines' effectiveness in providing U.S. dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily.
15/March 20, 2020
Through MMLF, the Federal Reserve Bank of Boston will make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds.
Through MMLF, the Federal Reserve Bank of Boston will make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds.
16/March 23, 2020
FOMC: The Committee will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations.
FOMC: The Committee will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations.
17/March 23, 2020
Add'l FOMC:
> Reaffirm $700B QE
> Add'l $300B measures backed by UST ESF
> PMCCF and SMCCF
> TALF
> MMLF expands into Muni's
> Expand CPFF to include Tax Exempt Paper
federalreserve.gov/newsevents/pre…
Add'l FOMC:
> Reaffirm $700B QE
> Add'l $300B measures backed by UST ESF
> PMCCF and SMCCF
> TALF
> MMLF expands into Muni's
> Expand CPFF to include Tax Exempt Paper
federalreserve.gov/newsevents/pre…
18/March 23, 2020 NYFed
(the Desk) at the FRB of NY increases the SOMA holdings of Treasury securities and agency MBS. The FOMC also directed the Desk to purchase agency commercial mortgage-backed securities (CMBS).
(the Desk) at the FRB of NY increases the SOMA holdings of Treasury securities and agency MBS. The FOMC also directed the Desk to purchase agency commercial mortgage-backed securities (CMBS).
19/March 23, 2020
The automatic restrictions associated with a firm's "total loss absorbing capacity," (TLAC) buffer. TLAC is an additional cushion of capital and long-term debt that could be used to recapitalize a bank if it is in distress. Allows use of buffers for lending.
The automatic restrictions associated with a firm's "total loss absorbing capacity," (TLAC) buffer. TLAC is an additional cushion of capital and long-term debt that could be used to recapitalize a bank if it is in distress. Allows use of buffers for lending.
20/March 31, 2020
Temporary facility for foreign and international monetary authorities (FIMA Repo Facility) to support the financial markets including U.S. Treasury market. FIMA account holders temporarily exchange U.S. Treasury held with the Federal Reserve for U.S. $'s
Temporary facility for foreign and international monetary authorities (FIMA Repo Facility) to support the financial markets including U.S. Treasury market. FIMA account holders temporarily exchange U.S. Treasury held with the Federal Reserve for U.S. $'s
