The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The Outreach & Education function engages, empowers and educates the public in the Second District. Our outreach mission furthers the Bank’s commitment to the region by listening to the communities we serve and developing programs, analysis and sponsored conferences and clinics to help meet their needs. Our education mission aims to advance public knowledge about the Federal Reserve System and its role in the economy.
On February 19-20, 2009, the Federal Reserve Bank of New York will host a conference that brings together academics, market participants, and policymakers to discuss the tools central banks use to provide liquidity to financial institutions and markets.
Overview In response to the recent market turmoil, central banks have designed a variety of new tools for supplying liquidity to financial institutions. The Federal Reserve, for example, has introduced several programs--the Term Auction Facility, the Term Securities Lending Facility, and the Primary Dealer Credit Facility--since December 2007, while enhancing traditional tools such as the discount window and open market operations. In addition, the European Central Bank and the Swiss National Bank have conducted liquidity-providing operations in U.S. dollars and established foreign exchange swap lines with the Fed. Central banks have also increased the range of collateral they accept in open market operations and lengthened the maturity terms of their liquidity provision.
These changes raise many questions. What are the effects of different methods of liquidity provision on financial markets, on market participants, and on the broader economy? Do the new policy tools constitute a fundamental change to the ways that central banks have traditionally provided liquidity to markets? Would central banks be well-served to include these facilities among their regular set of policy tools?