The Federal Reserve's Liquidity Backstops to the Municipal Bond Market during the COVID-19 Pandemic

Bin Wei and Vivian Z. Yue

Policy Hub, 2020, vol. 2020, issue 5, 10

Abstract: The COVID-19 pandemic has caused tremendous hardship all over the world. In response, the Federal Reserve has moved quickly and aggressively to support the economy in the United States. In this article, we present some initial evidence for the effectiveness of some of the facilities in calming the municipal bond market, particularly the short-term variable-rate demand obligation (VRDO) market. We discuss the important role of liquidity backstops in mitigating runs and stabilizing financial markets in general based on insights from our study on the runs on VRDO and auction-rate securities (ARS) in 2008 during the financial crisis.

Keywords: COVID-19 pandemic; liquidity backstops; municipal bond (search for similar items in EconPapers)
JEL-codes: G10 G20 G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.atlantafed.org/-/media/documents/resea ... ovid-19-pandemic.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:99134

DOI: 10.29338/wp2020-05

Access Statistics for this article

More articles in Policy Hub from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Robert Sarwark ().