Report

COVID Response: The Primary Dealer Credit Facility

Abstract: The Federal Reserve established a new Primary Dealer Credit Facility (PDCF) in March 2020, to allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households, in the face of deteriorating conditions in the market for triparty repo financing due to the coronavirus pandemic. A similar facility had been established in March 2008 to help restore the orderly functioning of the market, following the near-bankruptcy of Bear Stearns, and to prevent the spillover of distress to other financial firms. This paper provides an overview of the 2020 PDCF and compares it to the 2008 version.

Keywords: primary dealer credit facility; COVID-19; Federal Reserve lending facilities; pandemic;

JEL Classification: E58; G21; G24;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2021-09-01

Number: 981

Note: This paper was prepared for an upcoming issue of the Economic Policy Review and a related New York Fed conference, “Implications of Federal Reserve Actions in Response to the COVID-19 Pandemic.”