The Term Auction Facility involves the Federal Reserve:
A) buying and selling government bonds.
B) lending reserves directly to banks.
C) providing reserves to banks through an auction.
D) competing with investment banks for Treasury securities.

Question

Quizplus · Accepted Answer

The Term Auction Facility involves the Federal Reserve providing reserves to banks through an auction. Under this program, banks bid for funds from the Fed and the funds are lent out at a fixed interest rate. It was introduced in December 2007 as a response to the financial crisis and it allows the Fed to provide liquidity to banks on a regular basis.

The Term Auction Facility Involves the Federal Reserve