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The Federal Reserve's contingency financing plan for the century date change

Author

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  • Evangeline Sophia Drossos
  • R. Spence Hilton

Abstract

With the approach of the new millennium last year, many market participants resolved to limit their exposure to Y2K-related risks by cutting back normal trading activities. The Federal Reserve foresaw that the widespread adoption of such a strategy could lead to serious liquidity problems in key financing markets. Consequently, the Fed undertook to create a Standby Financing Facility that would provide securities dealers with a form of backup funding and ease market anxieties about year-end credit conditions.

Suggested Citation

  • Evangeline Sophia Drossos & R. Spence Hilton, 2000. "The Federal Reserve's contingency financing plan for the century date change," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Dec).
  • Handle: RePEc:fip:fednci:y:2000:i:dec:n:v.6no.15
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    Cited by:

    1. Suresh Sundaresan & Zhenyu Wang, 2006. "Y2K options and the liquidity premium in Treasury bond markets," Staff Reports 266, Federal Reserve Bank of New York.

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