TIMELINE - Fed actions to boost liquidity

Thu Aug 28, 2008 7:39pm BST
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(Reuters) - The U.S. Federal Reserve has taken various measures to help strained money markets after a global liquidity crunch erupted in August last year.

Following is a chronology of events.

July 30: The Fed expanded its liquidity offerings to try to ease still strained financial markets.

The U.S. central bank said its Primary Dealer Credit Facility (PDCF) and its Term Securities Lending Facility (TSLF) will be extended through January 30. The PDCF was initially launched as a six-month measure in March in the wake of the near bankruptcy of Bear Stearns.

It also said that it will introduce 84-day Term Auction Facility (TAF) loans, which it said will complement its existing 28-day TAF loans. The Fed introduced the loans program to try to ease a credit crunch that policy-makers feel has shown only limited signs of easing.

In addition, the Fed increased its swap line with the European Central Bank to $55 billion (30 billion pounds) from $50 billion.

July 13: The Fed authorizes government-sponsored entities Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) to borrow from its discount window as necessary for emergency funding. Any lending would be collateralized by U.S. government and agency securities. The Fed also agrees to take on a consultative role in setting capital requirements and financial safety and soundness standards for the two companies.

May 13: The Fed writes to Congress seeking immediate authority to pay interest on reserves held by banks at the Fed. The central bank says this move will contribute to the efficiency of the financial system.

April 9: The Fed says it is considering a plan in which the Treasury Department would borrow in excess of its requirements and deposit the surplus at the Fed. The central bank is also considering whether to issue debt under the Fed's name and seek authority to immediately pay interest on commercial bank reserves.  Continued...

 
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