Lorie K Logan: Liquidity shocks - lessons learned from the global financial crisis and the pandemic

Remarks (via videoconference) by Ms Lorie K Logan, Executive Vice President in the Markets Group of the Federal Reserve Bank of New York, at the 2021 Financial Crisis Forum, Panel on Lessons for Emergency Lending, 11 August 2021.

Central bank speech  | 
11 August 2021

As prepared for delivery

Thank you to the Yale Program on Financial Stability and to the Bank for International Settlements for the invitation to speak at today's forum.1  Financial crises can have deep and lasting effects on the economy.  They disrupt the vital flow of credit, damage business and household balance sheets, and result in lost jobs and income for the American public.  Given these costs, it is critical that we learn the lessons of past crises and continue to build knowledge about the tools and interventions that will help us respond effectively in the future.  Discussions like the one we'll have today are valuable opportunities to evolve our thinking on policy implementation and crisis management.        

Today, I'll share some lessons I've taken from two crises that occurred during my time implementing monetary policy: the Global Financial Crisis (GFC) and the coronavirus pandemic shock.  I'll discuss liquidity shocks and how central bank actions address them.  In particular, I'll focus on a recent decision by the Federal Open Market Committee (FOMC) to establish two standing repo facilities to support the effective implementation of monetary policy and smooth market functioning: the Standing Repo Facility and the FIMA Repo Facility.

Before I begin, let me say that my comments today reflect my own views and not necessarily those of the New York Fed or the Federal Reserve System.