Recovery
According to the Federal Reserve Monetary Policy Report issued in February 2010, the recovery in financial markets began last spring and has continued into 2010. Conditions in short-term funding markets have returned to near pre-crisis levels and liquidity and pricing in bank funding markets continued to normalize. The Fed also stated that the functioning of financial markets is expected to generally improve further.
In a 2009 release from The Federal Reserve, the Fed said that it “is engaged in an ongoing assessment of the effectiveness of its credit-related tools”.
Because the initial purpose behind the creation of the new standing facilities was to increase liquidity in the market, the programs can be said to be successful. The enacted lending facilities succeeded in relaxing the severe liquidity strains experienced by many firms and has provided confidence necessary for the improvement and restoration of normal of interbank lending markets.
With improved conditions in financial markets, the Federal Reserve and other agencies removed some of the extraordinary support that had been provided during the crisis. Starting in the second half of 2009, the Federal Reserve began to normalize its lending to commercial banks.
Now in a state of recovery, most of the facilities established by the Fed during the crisis have expired and begun to unwind. The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility were closed on February 1, 2010, along with bilateral current swap agreements. Also, the final Term Auction Facility auction was conducted on March 8, 2010 (federalreserve.gov).
The Fed has not expressed any explicit concerns in complications or consequences from the programs.
The Federal Reserve also succeeded in preventing systemic failure of the financial system by keeping certain financial institutions from failing through bail-outs.
In a 2009 release from The Federal Reserve, the Fed said that it “is engaged in an ongoing assessment of the effectiveness of its credit-related tools”.
Because the initial purpose behind the creation of the new standing facilities was to increase liquidity in the market, the programs can be said to be successful. The enacted lending facilities succeeded in relaxing the severe liquidity strains experienced by many firms and has provided confidence necessary for the improvement and restoration of normal of interbank lending markets.
With improved conditions in financial markets, the Federal Reserve and other agencies removed some of the extraordinary support that had been provided during the crisis. Starting in the second half of 2009, the Federal Reserve began to normalize its lending to commercial banks.
Now in a state of recovery, most of the facilities established by the Fed during the crisis have expired and begun to unwind. The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility were closed on February 1, 2010, along with bilateral current swap agreements. Also, the final Term Auction Facility auction was conducted on March 8, 2010 (federalreserve.gov).
The Fed has not expressed any explicit concerns in complications or consequences from the programs.
The Federal Reserve also succeeded in preventing systemic failure of the financial system by keeping certain financial institutions from failing through bail-outs.
