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- Marco Cipriani & Gabriele La Spada & Reed Orchinik & Aaron Plesset (2020): The Money Market Fund Liquidity Facility
In this post, we describe a liquidity facility established by the Federal Reserve in response to these outflows.
RePEc:fip:fednls:87925 Save to MyIDEAS - Morten Bech & Todd Keister (2014): On the economics of committed liquidity facilities
We study the effects of the new Basel III liquidity regulations in jurisdictions with a limited supply of high-quality liquid assets. Using a model based on Bech and Keister (2013), we show how introducing a liquidity coverage ratio in such settings can have significant side effects, leading to a large liquidity premium and pushing the short-term interest rate to the floor of the central bank's rate corridor. Adding a committed liquidity facility allows the central bank to mitigate these effects. By pricing committed liquidity appropriately, the central bank can determine either the equilibrium liquidity premium or the quantity of liquid assets held by banks, but not both.
RePEc:bis:biswps:439 Save to MyIDEAS - Andrew F. Haughwout & Benjamin Hyman & Or Shachar (2022): The Municipal Liquidity Facility
In April 2020, the Federal Reserve announced the establishment of the Municipal Liquidity Facility (MLF) to help municipalities manage the cash flow challenges that the pandemic produced. ... Effects on real economic outcomes like employment in the sector are harder to attribute to the facility.
RePEc:fip:fednep:94431 Save to MyIDEAS - Desi Volker (2022): The Paycheck Protection Program Liquidity Facility
To bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP), the Federal Reserve, with the backing of the Secretary of the Treasury, established the Paycheck Protection Program Liquidity Facility (PPPLF). The facility was intended to supply liquidity to financial institutions participating in the PPP and thereby provide relief to small businesses and help them maintain payroll. In this article, the author lays out the background and rationale for the creation of the facility, covers the salient features of the PPP and the PPPLF, and analyzes the facility’s loan take-up.
RePEc:fip:fednep:94438 Save to MyIDEAS - Marco Del Negro & Gauti B. Eggertsson & Andrea Ferrero & Nobuhiro Kiyotaki (2011): A quantitative evaluation of the Fed’s liquidity facilities
We introduce liquidity frictions into an otherwise standard DSGE model with nominal and real rigidities and ask: Can a shock to the liquidity of private paper lead to a collapse in short-term nominal interest rates and a recession like the one associated with the 2008 U.S. financial crisis? Once the nominal interest rate reaches the zero bound, what are the effects of interventions in which the government provides liquidity in exchange for illiquid private paper? We find that the effects of the liquidity shock can be large, and we show some numerical examples in which the liquidity facilities prevented a repeat of the Great Depression in 2008-09.
RePEc:fip:fednsr:520 Save to MyIDEAS - Michael Abrahams (2012): Federal Reserve Liquidity Facilities Gross $22 Billion for U.S.
During the 2007-09 crisis, the Federal Reserve took many measures to mitigate disruptions in financial markets, including the introduction or expansion of liquidity facilities. Many studies have found that the Fed’s lending via the facilities helped stabilize financial markets. ... In this post, I bring information together from various sources and time periods to show that the facilities generated $21.7 billion in interest and fee income.
RePEc:fip:fednls:86836 Save to MyIDEAS - Haoyang Liu & Desi Volker (2020): The Paycheck Protection Program Liquidity Facility (PPPLF)
Among the measures taken was the establishment of a new facility intended to facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP). Under the Paycheck Protection Program Liquidity Facility (PPPLF), Federal Reserve Banks are authorized to supply liquidity to financial institutions participating in the PPP in the form of term financing on a non-recourse basis while taking PPP loans as collateral. The facility was launched April 16, 2020.
RePEc:fip:fednls:88022 Save to MyIDEAS - Mike Eggleston (2021): Fed’s PPP Liquidity Facility Provides CDFIs Balance Sheet Relief
Learn how the Federal Reserve’s Paycheck Protection Program Liquidity Facility has aided community development financial institutions in supporting small businesses during the COVID-19 pandemic.
RePEc:fip:fedlbr:95322 Save to MyIDEAS - Kenechukwu E. Anadu & Marco Cipriani & Ryan M. Craver & Gabriele La Spada (2022): The Money Market Mutual Fund Liquidity Facility
In this article, the authors discuss the run on prime money market funds (MMFs) that occurred in March 2020, at the onset of the COVID-19 pandemic, and describe the Money Market Mutual Fund Liquidity Facility (MMLF), which the Federal Reserve established in response to it. They show that the MMLF, like a similarly structured Federal Reserve facility established during the 2008 financial crisis, was an important tool in stemming investor outflows from MMFs and restoring calm in short-term funding markets. The usage of the facility was higher by funds that suffered larger outflows. After the facility’s introduction, outflows from prime MMFs decreased more for those funds that had a larger share of illiquid securities.
RePEc:fip:fednep:94436 Save to MyIDEAS - Nellen, Thomas (2019): Intraday liquidity facilities, late settlement fee and coordination
This paper analyses the intraday liquidity management game played in large-value payment systems accounting for a variable and a fixed cost of liquidity. While the liquidity cost is a decisive factor for settlement behaviour, the availability of intraday liquidity until end-of-day matters too, as it mutes late settlement incentives originating from settlement risk. Whether liquidity is provided via overdraft or intraday credit hardly matters. ... Its calibration is usually non-trivial with the major exception of a fixed cost and end-of-day availability of intraday liquidity.
RePEc:eee:jbfina:v:106:y:2019:i:c:p:124-131 Save to MyIDEAS