Washington (AP)– The Federal Reserve announced late Wednesday that it will establish an emergency situation financing center to assist unclog a short-term credit market that has been interrupted by the viral outbreak.
The Fed said it will lend money to banks that buy financial possessions from money market mutual funds, consisting of short-term IOUs called commercial paper.
By assisting in the purchase of commercial paper, which is provided by big companies and banks, the Fed intends to spur more loaning to companies that are seeking t