The U.S. Federal Reserve Monday doubled its Term Auction Facilities - - its short-term loans provided to banks - - to as much as $900 billion.
"The Federal Reserve stands ready to take additional measures as necessary to foster liquid money-market conditions,'' the central bank said. The Fed also will begin paying interest on bank reserves.
The Fed added that it and the U.S. Treasury are "consulting with market participants on ways to provide additional support for term unsecured funding markets."
As part of the action, The Fed will increase its auctions under the 28-day and 84-day Term Auction Facility operations to $150 billion each. The two forward TAF auctions in November will be increased to $150 billion each, the Fed said.
Separately, the U.S. Treasury announced Monday it will make adjustments to its auction calendar by increasing the size of bill and note auctions and continuing to issue cash management bills, some of longer-duration. In addition, the Treasury said it was considering reintroducing the 3-year note in November and taking other steps.
Monetary / Economic Analysis: A much-needed action by the Fed to enhance liquidity. Look for the European Central Bank, Bank of England, Swiss National Bank, and Bank of Japan to pitch-in with similar liquidity-enhancing monetary programs/facilities, although they're not likely to be as large. At this juncture, it's hard to predict how much additional money will be needed in the U.S./Europe to prevent the crisis from widening, but Economist David H. Wang estimated it could exceed $2 trillion.
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Reader Comments (Page 1 of 1)
10-07-2008 @ 4:05AM
Patriot said...
Its all part of a global plan to bring in the New World Order... Go to Google Videos and watch a little 2 hr movie by Alex Jones called "ENDGAME" It's time to WAKE UP AMERICA/WORLD!!!