WASHINGTON (Reuters) - The U.S. Federal Reserve on Tuesday launched a new facility to fund purchases of certificates of deposit and commercial paper from money market mutual funds in the latest step to provide liquidity to strained financial markets.
"By facilitating the sales of money market instruments in the secondary market, the MMIFF (Money Market Investor Funding Facility) should improve the liquidity position of money market investors, thus increasing their ability to meet any further redemption requests and their willingness to invest in money market instruments," the Fed said in a statement.
The New York Fed will provide senior secured funding to a series of special purpose vehicles to finance purchases of certificates of deposit and commercial paper from U.S. money market mutual funds and others, the central bank said.
Eligible assets include dollar-denominated CDs and commercial paper issued by highly rated financial institutions and having remaining maturities of 90 days or less.
Eligible investors include U.S. money market mutual funds but may over time include other U.S. money market investors, the Fed said.
(Reporting by Mark Felsenthal; Editing by Neil Stempleman)
