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COVID Response: The Primary Dealer Credit Facility

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  • Antoine Martin
  • Susan McLaughlin

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.

Suggested Citation

  • Antoine Martin & Susan McLaughlin, 2021. "COVID Response: The Primary Dealer Credit Facility," Staff Reports 981, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:93072
    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.”
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    References listed on IDEAS

    as
    1. O'Hara, Maureen & Zhou, Xing (Alex), 2021. "Anatomy of a liquidity crisis: Corporate bonds in the COVID-19 crisis," Journal of Financial Economics, Elsevier, vol. 142(1), pages 46-68.
    2. Michael J. Fleming & Asani Sarkar & Peter Van Tassel, 2020. "The COVID-19 Pandemic and the Fed’s Response," Liberty Street Economics 20200415, Federal Reserve Bank of New York.
    3. Lucinda Brickler & Adam Copeland & Antoine Martin, 2011. "Everything You Wanted to Know about the Tri-Party Repo Market, but Didn't Know to Ask," Liberty Street Economics 20110411, Federal Reserve Bank of New York.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    primary dealer credit facility; COVID-19; Federal Reserve lending facilities; pandemic;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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