The US central bank is launching a support program for investment funds to counteract the damaging effects of the corona crisis on the financial markets. The so-called money markets mutual funds are under pressure because of the crisis because companies and households withdraw their money from those funds because of the corona crisis.
The Fed is now setting up a special emergency scheme to provide liquidity to those funds. Such a step was already taken during the financial crisis. The U.S. Treasury Department is also launching a $ 10 billion credit protection program for those funds.
“Mutual funds are common investment opportunities for families and businesses,” the Fed said. The emergency program will assist these funds when it comes to withdrawing money from households and other investors, states the umbrella of central banks in the United States.
The Fed has already taken several steps to address the crisis, including interest rate cuts and bond purchases to pump additional money into the financial system.
