The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.

The Crisis and Policy Response Speech by Chairman Ben S. The Federal Reserve's Policy Actions during the Financial Crisis and Lessons for the Future Speech by Vice Chairman Donald L. Kohn, May 13, The Federal Reserve responded aggressively to the financial crisis that emerged in the summer of , including the implementation of a number of programs designed to support the liquidity of financial institutions and foster improved conditions in financial markets.

These programs led to significant changes to the Federal Reserve's balance sheet. While these crisis-related special programs have expired or been closed, the Federal Reserve continues to take actions to fulfill its statutory objectives for monetary policy: Over recent years, many of these actions have involved substantial purchases of longer-term securities aimed at putting downward pressure on longer-term interest rates and easing overall financial conditions.

The tools described in this section can be divided into three groups. The first set of tools, which are closely tied to the central bank's traditional role as the lender of last resort, involve the provision of short-term liquidity to banks and other depository institutions and other financial institutions.

The traditional discount window falls into this category, as did the crisis-related Term Auction Facility TAF , Primary Dealer Credit Facility PDCF , and Term Securities Lending Facility TSLF. Because bank funding markets are global in scope, the Federal Reserve also approved bilateral currency swap agreements with several foreign central banks.

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The swap arrangements assist these central banks in their provision of dollar liquidity to banks in their jurisdictions. A second set of tools involved the provision of liquidity directly to borrowers and investors in key credit markets.

The crisis-related Commercial Paper Funding Facility CPFF , Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility AMLF , Money Market Investor Funding Facility MMIFF , and the Term Asset-Backed Securities Loan Facility TALF fall into this category. As a third set of instruments, the Federal Reserve expanded its traditional tool of open market operations to support the functioning of credit markets, put downward pressure on longer-term interest rates, and help to make broader financial conditions more accommodative through the purchase of longer-term securities for the Federal Reserve's portfolio.

Starting in January , the FOMC reduced the pace of asset purchases in measured steps, and concluded the purchases in October As noted above, the Federal Reserve's crisis-related special credit and liquidity programs have expired or been closed.

Information on these programs is available on the Information on closed programs page. Board of Governors of the Federal Reserve System.

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The Fed - Crisis response

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