US Fed approves extension of 4 emergency Covid-19 lending facilities

The US Federal Reserve Board has approved the extension of four of its emergency Covid-19 lending facilities until March 31, 2021.

“The extension, which has also been approved by the Treasury Department, will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available through the first quarter of 2021 to help the economy recover from the Covid-19 pandemic,” Xinhua news agency quoted the Fed as saying in a statement on Monday.

The extensions apply to the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, the Primary Dealer Credit Facility, and the Paycheck Protection Program Liquidity Facility, which are set to expire at the end of the year, according to the Fed.

“The emergency lending facilities established to provide liquidity to the financial system and stabilize credit markets have been successful. Financial conditions have responded and the use of these facilities has been limited,” Treasury Secretary Steven Mnuchin said in a separate statement.

“In an abundance of caution, however, I requested that the facilities to which Treasury has provided funds from the pre-existing Exchange Stabilization Fund, and the facilities that did not require Treasury funding, be extended until March 31,” he added.

The move came after Mnuchin asked the Fed to end five emergency Covid-19 lending facilities and return $455 billion of unused funds more than a week ago.

Mnuchin said that these emergency lending facilities “have clearly achieved their objective”.

In March, Congress approved a $2.2 trillion Covid-19 relief bill known as the CARES Act, which provided the Treasury around $500 billion to set up a variety of emergency lending facilities through the Fed and guarantee loans.