A primary dealer credit facility (PDCF) aimed at facilitating the availability of credit to businesses and households was announced Tuesday by the Federal Reserve Board, which said the facility is set to open Friday, March 20.
The PDCF will offer overnight and term funding with maturities up to 90 days. It will be in place for at least six months and may be extended as conditions warrant, the Fed said.
Credit extended to primary dealers under this facility may be collateralized by a broad range of investment grade debt securities, including commercial paper and municipal bonds, and a broad range of equity securities. The interest rate charged will be the primary credit rate, or discount rate, at the Federal Reserve Bank of New York. Only primary dealers of the New York Fed are eligible to participate.
The Fed said more detailed terms and conditions and an operational calendar will be subsequently released.