billion for central banks in Denmark, Norway
and New Zealand. Under the swaps, the Fed
provides dollars for an equal amount of foreign
currency, which it can also use in short-term
lending to banks if needed.
The Fed already maintains such currency
exchanges with five other central banks,
including the European Central Bank, the Bank
of Japan, and the Bank of Canada.
Late Wednesday, the Fed announced its third
emergency lending program to provide money
to banks that purchase financial assets from
money market mutual funds, including short-
term IOUs known as commercial paper.
By facilitating the purchase of commercial paper,
which is issued by large businesses and banks,
the Fed hopes to spur more lending to firms
that are seeking to raise cash as their revenues
plummet amid the spread of the coronavirus.
This facility, known as the Money Market Mutual
Fund Liquidity Facility, is intended to help
money market funds unload assets such as
commercial paper, but also Treasury securities
and bonds guaranteed by mortgage giants
Fannie Mae and Freddie Mac.
Money market mutual funds are owned by
individual investors in brokerage accounts but
also by institutional investors and businesses.
Many of the funds have sought in the past two
weeks to sell assets to raise cash as investors
redeem shares in the funds. Yet with demand for
cash rising money market funds have struggled
to find buyers for their assets.
The program was established with the support of
the Treasury Department, which will guarantee
up to $10 billion in loans from the facility.