NY Fed's Williams says low take-up of emergency lending facilities a sign of success

(Reuters) – The emergency lending facilities set up by the Federal Reserve helped to ease credit markets after they were disrupted by the pandemic, and relatively low usage of the programs is a sign that markets are functioning well, New York Fed president John Williams said Thursday.

The central bank had to take an innovative approach when responding to markets to help keep credit flowing to households and businesses, reviving some programs used during the 2008 financial crisis but also establishing new ones, Williams said in remarks prepared for a webinar.

“The scale and reach of the response is an indication of the gravity and unique nature of the situation we are facing,” Williams said.

While some of the programs have not been heavily used, Williams said that is a positive sign because it means that credit remains available.

“This is in fact a measure of success — the existence of the facilities, even in a backstop role, has helped boost confidence to the point where borrowers are able to access credit from the private market at affordable rates,” he said.

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