Journal Article

The Federal Reserve responds to crises: September 11th was not the first

Abstract: A primary purpose of the Federal Reserve Act of 1913 was to prevent banking panics by establishing the Federal Reserve System to function as a lender of last resort. Other types of financial crisis require a similar response, however, and the Federal Reserve has repeatedly used its capacity to generate liquidity to insulate the economy from crises in financial markets. The Fed?s response to the terrorist attacks of September 11, 2001, is the most recent example of this. This paper reviews the Fed?s responses to crises and potential crises in financial markets: the stock market crash of 1987, the Russian default, and the September 11th attacks.

Keywords: Money supply; Monetary policy;

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 2004

Volume: 86

Issue: Mar

Pages: 27-42