Federal Reserve and Other Central Banks Announce Expansion of Liquidity Measures
May 2, 2008
Circular No. 11951

Central banks have continued to work together and to consult regularly on liquidity conditions in financial markets. In view of the persistent liquidity pressures in some term funding markets, the European Central Bank (ECB), the Federal Reserve and the Swiss National Bank (SNB) have announced an expansion of their liquidity measures.

The Federal Reserve has announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility (TAF) from $50 billion to $75 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion.

In conjunction with the increase in the size of the TAF, the Federal Open Market Committee (FOMC) has authorized further increases in its existing temporary reciprocal currency arrangements with the ECB and the SNB.

These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing increases of $20 billion and $6 billion. The FOMC extended the term of these reciprocal currency arrangements through January 30, 2009.

In addition, the FOMC authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility auctions.

See the Board's press release for full details.

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