The Fed also plans to lower the minimum yield on assets eligible to be sold to the facility.
The programme was initially designed to provide assistance solely to money-market funds. It will now allow US-based securities lending cash-collateral reinvestment funds, securities lenders and US-domiciled investment funds to take advantage of the facility.
The Fed first announced its plan to loan up to $540 billion to ailing money-market funds on October 21, in an attempt to boost market liquidity.
The economic crisis led to concerns that money-market funds would be unable to meet rising redemption requests. Exposure to Lehman Brothers commercial paper led New York-based money-market fund Reserve Primary to 'break the buck', or fell below $1.00 in net asset value, on September 16. Putnam Investments elected to close and liquidate its Prime Money Market Fund after heightened redemption pressures.
As of December 31, the Federal Reserve's balance sheet showed it had not made any purchases via the MMIFF.
It has, however, purchased $334,102 million in commercial paper as of the end of 2008 through its Commercial Paper Funding Facility (CPFF), which allows it to buy commercial paper from US banks.