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Title:Responses to the financial crisis, treasury debt, and the impact on short-term money markets PDF Logo
Authors:Hrung, Warren B.
Seligman, Jason S.
Issue Date:2011
Series/Report no.:Staff Report, Federal Reserve Bank of New York 481
Abstract:Several programs have been introduced by US fiscal and monetary authorities in response to the financial crisis. We examine the responses involving Treasury debt - the Term Securities Lending Facility (TSLF), the Supplemental Financing Program, increases in Treasury issuance, and open market operations - and their impacts on the overnight Treasury general collateral repo rate, a key money market rate. Our contribution is to consider each policy in light of the others, both to help guide policy responses to future crises and to emphasize policy interactions. Only the TSLF was designed to directly address stresses in short-term money markets by temporarily changing the supply of Treasury collateral in the marketplace. We find that the TSLF is uniquely effective relative to other policies and that, while changes in Treasury collateral do affect reporates, the impacts are not equivalent across sources of Treasury collateral.
Subjects:Treasury debt
repo rates
money markets
financial crisis
monetary policy
JEL:E50
G01
H60
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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