Federal Reserve Creates Money Market Fund Liquidity Facility

On March 18, 2020, the Federal Reserve (Fed) announced the creation of a Money Market Mutual Fund Liquidity Facility (MMFLF).  The MMFLF will last until September 30, 2020 and applies to money market funds (MMFs) that identify themselves as “prime” MMFs on Form N-MFP.  Under the MMFLF, eligible borrowers (certain types of U.S. banks and U.S. branches of foreign banks) would be able to purchase eligible collateral from prime MMFs and receive a loan from the Federal Reserve Bank of Boston (Reserve Bank).

Eligible collateral includes U.S. Treasuries and fully guaranteed agencies, securities issued by U.S. Government Sponsored Entities, highly-rated secured and unsecured commercial paper issued by domestic issuers, and receivables from certain repurchase agreements.

The Fed’s press release and term sheet are available at the links below:

https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200318a1.pdf