FACTBOX: The Fed's evolving liquidity toolkit

(Reuters) - The U.S. Federal Reserve has rolled out a series of measures over the past 14 months to enhance its liquidity tools and ease strains in credit markets that have been hammered by mortgage-related losses.

The following is a look at the Fed's 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.

* The Fed also extended the term of financing to 90 days for institutions in good standing.

* The Fed on March 16 again narrowed the spread between the discount rate and the fed funds rate to a quarter-percentage point, where it remains.

As of the Fed's last policy-setting action October 8, the discount rate stands at 1.75 percent, while the fed funds target is 1.5 percent.

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 Sept 19 said it will open its discount window to financial institutions to allow them to buy certain assets from money market mutual funds. Non-recourse loans will be offered at the primary credit rate to finance purchases of asset-backed commercial paper (ABCP). This should help funds that hold such paper meet demands for redemptions by investors and boost liquidity in the ABCP markets and broader money markets. The move came in step with a $50 billion pledge from the U.S. Treasury to bank money market mutual funds.

The Fed also announced plans to purchase federal agency discount notes from primary dealers. Those notes are short-term debt obligations issued by Fannie Mae and Freddie Mac, which were seized by the government on September 7, and the Federal Home Loan Banks.

SWAP LINES WITH OTHER CENTRAL BANKS

The Fed has steadily expanded reciprocal currency arrangements with other major central banks to lend to their local commercial banks in a bid to get U.S. dollars circulating in overnight and short-term money markets.

On October 14 The U.S. Federal Reserve erased the upper limit on its currency swap line with the Bank of Japan, the latest in an extensive series of steps to restore stability in shaky credit markets world-wide.

On October 13, the Fed said it would lift the cap on its swap facilities with the Bank of England, the European Central Bank and the Swiss National bank to provide funding "in quantities sufficient to meet demand."

The Fed also has authorized swap lines with the central banks of Canada, Norway, Australia, and Sweden.