Money Market Primer: How to Measure Stress in the Financial System

Overview

The robust steps taken by the Federal Reserve to shore up the front end of the money markets are essential to the free flow of capital and global economic stability. Whether the Fed will bring back some of its financial crisis-liquidity and lending facilities to address the escalating Coronavirus crisis in the financial system, the bottom line is that well-functioning money markets are necessary for commercial activity. We take a closer look at a series of accessible metrics that can be used to estimate stress across money markets and help determine when the crisis is intensifying or easing.

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