Alternative arrangements for the distribution of intraday liquidity

James McAndrews

Current Issues in Economics and Finance, 2006, vol. 12, issue Apr

Abstract: In July 2006, the Federal Reserve will end its provision of free daylight credit to government-sponsored enterprises (GSEs), financial services corporations created by Congress to establish a secondary market in mortgages and other consumer loans. To meet their payments to investors, the GSEs can use a wide variety of alternative funding arrangements. While such arrangements can in theory distribute liquidity efficiently, a decline in the intraday funds in circulation following the Fed's move may lead to some slowing in payments by both the GSEs and commercial banks.

Keywords: Bank liquidity; Government-sponsored enterprises; Credit; Federal funds (search for similar items in EconPapers)
Date: 2006
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