Fed expands MMIFF

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.

See also: Fed promises $540 billion boost for money markets
Federal Reserve to buy commercial paper from US banks

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here