Saturday, October 19, 2019
Finance memo Essay Example | Topics and Well Written Essays - 500 words - 1
Finance memo - Essay Example The objective of weekly loan facility was to promote liquidity in the treasury and security markets, which could result in advanced occupation of financial markets. The TALF was announced in the month of November 2008. The prime objective of this facility was to provide a funding facility to meet the needs of small and domestic businesses through the support of issuance of asset-backed securities. The TSLF is in contrast to the conventional monetary policy used by the Federal Reserve used to answer the disruptions of the credit market. TSLF creates support of liquidity for the primary dealers where they are operating. TSLF was used in contrast to the conventional interest rate policy where the Federal Reserve eyes to increase the rate of interest at which the interbank dealing takes place. The Federal Reserve had to carry out asset purchases of large scale in order to increase interest rates. (Advisers) TALF is considered as a monetary policy tool by the Federal Reserve as it was aimed at reopening of the securitization market in order to improve the access towards the credit instruments for the small and household businesses. (Brown) This has given a rise to the consumer and small business lending where the investors have gained a lot of confidence in the ability of the market to function without the support of the government. It was noticed that by March 2009, the percentage of purchase of the asset backed securities using TALF was around 60%.