The Federal Reserve said Tuesday it is establishing an emergency lending facility to support short-term commercial debt markets to help ease the impact of the coronavirus pandemic.
“The commercial-paper market has been under considerable strain in recent days as businesses and households face greater uncertainty in light of the coronavirus outbreak,” the Fed’s board of governors said in a statement. “By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial-paper obligations, this facility should encourage investors to once again engage in term lending in the commercial-paper market.”
Treasury Secretary Steven T. Mnuchin said he notified Fed Chairman Jerome Powell that he approves the move.
People were interested in these podcasts
“The economic disruption and uncertainty created by COVID-19 has created challenges for the commercial paper market, constraining access to short-term credit for American businesses,” Mr. Mnuchin said. “By providing short-term credit, the CPFF [Commercial Paper Funding Facility] will help American businesses manage their finances through this challenging period.”
Contact the author
Please read our comment policy before commenting.