Federal Reserve's Response to COVID-19: Policy Issues [June 12, 2020]   [open pdf - 1MB]

From the Summary: "The Coronavirus Disease 2019 (COVID-19) pandemic has caused widespread disruptions to the economy. The Federal Reserve (Fed) has taken multiple policy actions in response to the crisis, and Congress has taken the unprecedented step of providing up to $500 billion to the Treasury to support Fed programs through the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748, CARES Act), signed into law as P.L. 116-136 on March 27, 2020. The Fed has taken a number of steps to promote economic and financial stability in both its monetary policy and its 'lender of last resort roles'. Some of these actions are intended to stimulate economic activity by reducing interest rates, and others are intended to provide liquidity so firms have access to needed funding. The Fed acts as a lender of last resort for banks by making short-term loans through the discount window, which it encouraged banks to access and made the borrowing terms more attractive when the pandemic began. Because foreign banks are reliant on U.S. dollar funding but cannot borrow from the discount window, the Fed has also allowed foreign central banks to swap their currencies for hundreds of billions of U.S. dollars so that the central banks can lend those dollars to banks in their jurisdiction."

Report Number:
CRS Report for Congress, R46411
Public Domain
Retrieved From:
Congressional Research Service: https://crsreports.congress.gov/
Media Type:
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