The Fed is expanding securities lending. WASHINGTON (Reuters) - The U.S. Federal Reserve said on Tuesday that
with pressure mounting again in financial markets, it was expanding a
securities lending program and will accept a broader range of
securities as collateral.
"Under this new Term Securities Lending Facility (TSLF), the Federal
Reserve will lend up to $200 billion of Treasury securities to primary
dealers secured for a term of 28 days...by a pledge of other
securities, including federal agency debt, federal agency
residential-mortgage-backed securities (MBS), and non-agency
AAA/Aaa-rated private-label residential MBS," the Fed said in a
statement.
The U.S. central bank said the purpose of its latest action was to
"promote liquidity in the financing markets for Treasury and other
collateral and thus to foster the function of financial markets more
generally."
The new lending facility will operate through weekly auctions that
will start on March 27, the Fed said. It said it still was consulting
primary dealers regarding the specific design of an auction.
The Fed said it was cooperating with other central banks, including
the Bank of Canada, Bank of England, European Central Bank and the
Swiss National Bank on steps to deal with pressures in global financial
markets.
It announced that its policy-setting Federal Open Market Committee
has authorized increases in existing swap lines with the European
Central Bank and the Swiss National Bank.
(Reporting by Glenn Somerville, Editing by Chizu Nomiyama)
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