Special Lending Facilities of the Fed: Actions and Results

Abstract

In this paper, we examined monetary policy from August 2007, when the Fed engaged in its first unconventional action, through December 2009, when most of the Fed’s special lending facilities became inactive. However, the monetary base remained in excess of $2 trillion which was more than double its size when these lending facilities began. Two things are very clear. The quantity of the Fed’s assets has increased, and the quality has decreased.

Keywords: Unconventional Monetary Policy, Liquidity Programs, Interest Rate Spreads

JEL Classification: E52, E58, E43