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Part I Responses to the Covid-19 Crisis and Maintenance of Financial Stability, 2 Measures Taken by the Federal Reserve in Response to Financial Stress in the US Economy Arising from the Global Pandemic

Thomas C Baxter

From: International Monetary and Banking Law post COVID-19

Edited By: William Blair, Christos Gortsos, Chiara Zilioli

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 15 April 2024

Banking — Liquidity — Federal Deposit Insurance Corporation (FDIC) — Federal Reserve System (‘Fed’)

This chapter tackles the Federal Reserve’s measures on the financial stress in the US economy following the global pandemic. It starts with the Federal Reserve’s overarching mandate to maintain and foster financial stability before tackling specific and subordinating mandates. The Federal Reserve’s mandates, the knowledgeable and deliberate use of available tools, and leadership are the three concepts that influenced the central bank’s actions. The chapter then cites the correlation between the progress of successful vaccine development and the progress in abating financial stresses caused by the pandemic. It explains how the Federal Reserve used liquidity to mitigate exceptional financial stress and improved its firepower through the creative and effective use of financial engineering.

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