Yesterday, the Federal Reserve Board announced the following changes to the Money Market Investor Funding Facility (MMIFF) announced in October 2008 and first implemented in November 2008:

  • expanded the category of institutions eligible as participating investors in the MMIFF, and
  • adjusted several of the economic parameters of the MMIFF including lowering the minimum yield on assets eligible to be sold to the MMIFF.  

In order to support a wider range of institutions impacted by illiquidity in the commercial paper market, the Board expanded the category of institutions eligible to be participating investors in the MMIFF to include U.S.-based securities-lending cash-collateral reinvestment funds, portfolios, and accounts (securities lenders) and U.S. based investment funds that operate in a manner similar to money market mutual funds, including certain local government investment pools, common trust funds, and collective investment funds. Initially, the MMIFF was only available to U.S. money market mutual funds and was created to help these funds satisfy redemption requests. Otherwise, the funds may have been forced to sell assets into an illiquid market. The Board is now expanding that assistance to other types of institutions, an action the Board suggested that it might take when it adopted the MMIFF in October, 2008.

The Board also lowered the minimum yield on assets eligible to be sold to the MMIFF so that the MMIFF would remain viable as a source of backup liquidity for money market investors—even at very low money market interest rates.