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FX.co ★ Federal Reserve Extends Lending Facilities, Swap Lines Additional 6 Months

Federal Reserve Extends Lending Facilities, Swap Lines Additional 6 Months

(RTTNews) - The Federal Reserve announced Tuesday that it is extending the term of several lending facilities as well as swap lines with foreign central banks for an additional six months as credit markets remain strained. The extension through October 30th, 2009 adds a half year from the original expiration date of April 30th, 2009, "in light of continuing substantial strains in many financial markets," the Federal Reserve said in a statement.

The bevy of lending facilities established over the past year plus represents a push from the nation's policymakers to think outside the box in addressing what many argue is the greatest financial crisis since the Great Depression. The extension of the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF) through October 30th will help credit markets as they struggle through the financial crisis.

In addition, the Federal Reserve moved the scheduled expiration of several temporary reciprocal currency arrangements (swap lines) between the Federal Reserve and other central banks up six months to October 30. The swap lines were extended "to address continued pressures in global U.S. dollar funding markets," the Fed said.

Swap lines currently affected include agreements with the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, the Norges Bank, the Monetary Authority of Singapore, the Sveriges Riksbank, and the Swiss National Bank.

However, not all banks have agreed to the extension. The Bank of Japan will consider the extension at its next Monetary Policy Meeting.

Despite the extension for other lending facilities, the Term Asset-Backed Securities Loan Facility (TALF)'s expiration date remains fixed at December 31, 2009.

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