Federal Reserve Opens Expanded Money Market Fund Liquidity Facility

On March 23, 2020, the Federal Reserve (Fed) announced the opening of an expanded 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, single state, or other tax exempt MMFs on Form N-MFP (Eligible MMFs). 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 Eligible MMFs and receive a loan from the Federal Reserve Bank of Boston (Reserve Bank). Under the revised term sheet for the MMFLF, 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 and negotiable certificates of deposit issued by U.S. issuers, highly-rated U.S. municipal short-term debt with a maturity that does not exceed 12 months, highly-rated variable rate demand notes with a demand feature that is exercisable within 12 months, and receivables from certain repurchase agreements.

The Fed’s press release and the updated MMFLF term sheet are available at the links below.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200323b4.pdf