"The Federal Reserve’s Recent Actions to Support the Flow of Credit to Households and Businesses"
Remarks by Lorie Logan, EVP, before the Foreign Exchange Committee → https://nyfed.org/2XAiOLH 

In early to mid-March, amid extreme volatility across financial markets triggered by the coronavirus pandemic, several markets at the center of the U.S. financial system were severely disrupted.

These markets matter not only for those who participate in them, but also—because of their central role in the financial system—for workers and families throughout the United States.

Therefore, it was important for [us] to act quickly and decisively to support market functioning and the flow of credit.

[R]ecent actions have involved an unprecedented array of tools—from standard [OMOs]... deployed on a larger scale than ever, to new facilities that use [our] emergency powers with consent of Treasury Secretary & financial backing from Treasury & Congress.
https://nyfed.org/3bE2M7h 

Funding markets transfer funds from households and businesses that seek safe, easily accessible short-term investments to firms that have short-term borrowing needs.

In mid-March, short-term funding markets became severely impaired. In repo and commercial paper markets, there was little term funding available. Even for overnight borrowing, some market participants paid much higher rates than usual.

The initial pressures in funding markets led to further strains. Investors became reluctant to buy the commercial paper of healthy issuers... Prime money market funds—which invest in commercial paper—saw outflows of about $150 billion over the month of March.

Starting March 9, [we] launched a series of actions to stabilize funding markets.

[We] lowered the primary credit rate by 150 basis points, to 0.25 percent, and announced that banks could borrow from the discount window for up to 90 days.
https://www.frbdiscountwindow.org/ 

Shortly thereafter, several additional actions used emergency tools.
The Primary Dealer Credit Facility (PDCF) allows the New York Fed’s primary dealers to obtain funding against a wide range of collateral at the same rate as the discount rate.
http://nyfed.org/2WCX5T5 

The Money Market Mutual Fund Liquidity Facility (MMLF) lends against assets that banks acquire from money market funds.
https://www.federalreserve.gov/monetarypolicy/mmlf.htm

The Commercial Paper Funding Facility (CPFF) purchases commercial paper directly from highly rated companies and municipal governments.

As the world’s preeminent reserve currency, the dollar plays a leading role in trade and investment far beyond our country’s borders... These markets, too, came under severe strain in March.

To ease strains in global U.S. dollar funding markets, the Fed and other central banks took coordinated actions in March to enhance the provision of U.S. dollar liquidity through central bank swap lines around the world.
https://nyfed.org/3aaZGGH 

In addition to the swap lines, [we] established a temporary repo facility to allow foreign and international monetary authorities to temporarily exchange U.S. Treasury securities held in their accounts with the [us] for U.S. dollars.
https://bit.ly/3bcAjWs 

The market for U.S. Treasuries is commonly described as the deepest & most liquid in the world... Although not as liquid as the Treasury market, the market for AMBS... is also ordinarily very liquid... in mid-March, liquidity in Treasuries & MBS dried up.
https://nyfed.org/3cVsFB7 

In response, [we] are undertaking extensive purchases of Treasuries and MBS to support the functioning of these critical markets...Also, we are now buying agency commercial mortgage-backed securities (CMBS).
https://nyfed.org/2XEVc8W 

[S]upporting smooth market functioning does not mean restoring every aspect of market functioning to its level before the coronavirus crisis... Nor does [it] mean eliminating all volatility.

In normal times, credit markets allow households and businesses to finance a vast array of activities: buying a car or a house, attending college... Yet credit markets have come under substantial pressure in recent weeks.

Many of [our] actions in funding and asset markets... described earlier are also helping to support credit markets.

For example, the PDCF, CPFF, and MMLF can all provide funding for loans to creditworthy borrowers such as households, businesses, or local governments, while MBS purchases support a key market for credit to households.

In addition, [we] with the consent of the Treasury Secretary backing provided by the Treasury Congress under the CARES Act, [have] used [our] emergency authority to announce numerous steps targeted at other major credit markets.

The Primary Market Corporate Credit Facility (PMCCF) will buy newly issued corporate bonds and syndicated loans.
https://nyfed.org/2Vt7xKB 

[T]he Secondary Market Corporate Credit Facility (SMCCF) will give investors an outlet to sell corporate bonds—in both cases supporting a key market for credit to large employers.
https://nyfed.org/34B3FLJ 

[We've] also announced a Main Street Lending Program that will purchase up to $600 billion in loans to small and midsize businesses, as well as a facility that will support the Small Business Administration’s Paycheck Protection Program (PPP).
https://www.federalreserve.gov/monetarypolicy/ppplf.htm

In addition, the Term Asset-Backed Securities Loan Facility (TALF) will support the issuance of securities backed by student loans, auto loans, credit card loans, small business loans, and other debt.
https://nyfed.org/2Vcbbt6 

[T]he Municipal Liquidity Facility (MLF) will lend up to $500 billion to state and local governments.
https://www.federalreserve.gov/monetarypolicy/muni.htm

All of these steps will help keep credit markets working and credit flowing to qualified borrowers in response to the coronavirus pandemic.

Modern financial markets are closely connected to one another. Stresses in one market can easily lead to stresses in others, raising the risk that the financial system as a whole becomes significantly impaired.

The Global Financial Crisis of 2007-’08 showed how rapidly problems can spread across financial markets and ultimately damage the economy.
https://nyfed.org/2K7BZVg 

Today’s crisis is different, having originated outside the financial system, in an enormous challenge to public health.