Both were efforts to keep credit flowing to businesses and households. Taking a page from its 2008 financial crisis playbook, the Fed said it would backstop the $1.13 trillion market for commercial paper, a key funding source used by companies to cover payroll and day-to-day operations. That market, used by firms like Pfizer, Royal Dominion and DuPont, has started to come under strain as businesses raced to fill up their coffers in the face of quarantines, shuttered shopping centers and empty restaurants. Not long after, the Fed said it would roll out a new Primary Dealers Credit Facility, which will allow banks that are key conduits between the Fed, Treasury Department and the broader financial system to get the short-term loans they need to buy and hold securities including corporate bonds. “The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households,” the Fed said of the new program.

Source: New York Times March 17, 2020 17:27 UTC