The Federal Reserve's Commercial Paper Funding Facility
Abstract: The Federal Reserve created the Commercial Paper Funding Facility (CPFF) in the midst of severe disruptions in money markets following the bankruptcy of Lehman Brothers on September 15, 2008. The CPFF finances the purchase of highly rated unsecured and asset-backed commercial paper from eligible issuers via primary dealers. The facility is a liquidity backstop to U.S. issuers of commercial paper, and its creation was part of a range of policy actions undertaken by the Federal Reserve to provide liquidity to the financial system. This paper documents aspects of the financial crisis relevant to the creation of the CPFF, reviews the operation of the CPFF, discusses use of the facility, and draws conclusions for lender-of-last-resort facilities in a market-based financial system.
Keywords: Commercial paper; Federal Reserve System; Financial crises; Liquidity (Economics); Federal Reserve Bank of New York;
File(s): File format is text/html https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr423.html
File(s): File format is application/pdf https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr423.pdf
Provider: Federal Reserve Bank of New York
Part of Series: Staff Reports
Publication Date: 2010