FACTBOX: The Fed's evolving liquidity toolkit

(Reuters) - The U.S. Federal Reserve on Tuesday said it would extend the terms of three emergency liquidity programs by three months, to April 30, 2009.

The Fed said the extension made the Primary Dealer Credit Facility (PDCF), the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF) and the Term Securities Lending Facility (TSLF) consistent with the terms already authorized for other liquidity facilities.

The following is a look at the Fed's evolving liquidity toolkit.

DISCOUNT WINDOW

The discount window is the Fed's traditional way of providing liquidity to depository institutions that it regulates. The Fed's first liquidity salvo was on August 17, 2007, when it unexpectedly lowered the discount rate by a half percentage point, narrowing the spread above the benchmark federal funds rate -- the rate banks charge each other for loans -- to a half percentage point. It narrowed the spread to just a quarter point on March 16. The Fed accepts a broad range of collateral for loans at the discount window.

SHORING UP MONEY MARKET MUTUAL FUNDS, MORTGAGE DEBT

The Fed on September 19 said it would make discount window loans to financial institutions to allow them to buy asset-backed commercial paper from money money market mutual funds. It also said it would buy notes issued by mortgage agencies Fannie Mae, Freddie Mac and Federal Home Loan Banks. On November 26 the Fed expanded those potential purchases by $100 billion and mortgage security purchases by $500 billion.

TERM ASSET-BACKED SECURITIES LOAN FACILITY

The Fed on November 25 announced it will lend up to $200 billion on a non-recourse basis to holders of some AAA-rated asset-backed securities (ABS) that hold fresh consumer and small business loans. The Treasury will pitch in $20 billion to help underwrite those investments.

COMMERCIAL PAPER FUNDING FACILITY (CPFF)

The Fed on October 7 said it would fund purchases of highly rated, U.S.-dollar denominated, three-month commercial paper. Purchases will be made through a special purpose vehicle that would begin purchases on October 17. The CPFF will cease purchases on April 30, 2009, unless extended.

MONEY MARKET INVESTOR FUNDING FACILITIES (MMIFF)

The Fed on October 21 announced a measure to help restore liquidity to money markets by facilitating lending by mutual funds and investors. The facility will be authorized to buy $600 billion in certificates of deposits and commercial paper with remaining maturities of 90 days or less. The facility is scheduled to wind down starting on April 30, 2009.

SWAP LINES WITH OTHER CENTRAL BANKS

The Fed has established several currency swap lines with other central banks so they have U.S. dollars to lend in their markets. All of the swaps initially had set limits, but on October 13 the Fed lifted the cap on its swaps with the European Central Bank, Swiss National Bank and Bank of England. On October 14, it erased the upper limit on its line with the Bank of Japan. The Fed also has authorized swap lines with the central banks of Canada, Norway, Australia, Sweden and New Zealand.

PRIMARY DEALER CREDIT FACILITY (PDCF)