The Federal Reserve's Term Auction Facility

Armantier, Olivier; Krieger, Sandra C.; McAndrews, James J.

Journal Article

The Federal Reserve's Term Auction Facility

Abstract: As liquidity conditions in the term funding markets grew increasingly strained in late 2007, the Federal Reserve began making funds available directly to banks through a new tool, the Term Auction Facility (TAF). The TAF provides term funding on a collateralized basis, at interest rates and amounts set by auction. The facility is designed to improve liquidity by making it easier for sound institutions to borrow when the markets are not operating efficiently.

Keywords: Banks and banking; Federal Reserve System; Bank liquidity;