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The Fed built on this principle with its new liquidity facilities.
That is now happening, and the liquidity facilities have begun to shrink (see chart).
But the central bank would like to scale back their use of its liquidity facilities.
With their arsenal of newfangled liquidity facilities, the monetary authorities think they have the problem under control.
Central banks have made a start, mainly by unwinding the emergency liquidity facilities with which they fought financial panic.
Those liquidity facilities charge borrowers a penalty rate which makes them less attractive as private credit returns.
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§ 741.210 Central liquidity facility.
Kaupthing boss tells FSA and Central Bank of Iceland that it will provide liquidity facility of £600m.
And EDF will provide Constellation with a $600 million "interim backstop liquidity facility," they said.
Special clauses on access to the "liquidity facility" (don't ask) apply on default.
This liquidity facility, as it is known, was meant to ensure that the agencies could obtain funds in a crunch.
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