standing facility, the taf resembles open market operations rather than the standard discount window and, partly as a result, it appears to have largely avoided the stigma problem that limited the effectiveness of the discount window. important questions for the federal reserve going forward are whether the benefits of the taf warrant its maintenance on an ongoing basis or whether, now that the taf has been developed, it can be brought off the shelf sufficiently quickly if warranted by circumstances. the dysfunction in money markets was by no means limited to the united states. in globally integrated financial markets, many banks overseas had dollar obligations that they were financing with short - term dollar borrowing. when funding markets were disrupted, the intense bidding of these banks for dollar financing put upward pressure on interest rates in the united states. to relieve this pressure, the federal reserve entered into liquidity swaps with foreign central banks to enable those central banks to lend dollars to commercial banks in their jurisdictions. we also need to decide whether and in what form we should keep this type of liquidity provision readily available for possible future use. although the federal reserve routinely conducts open market operations through primary dealers, as noted above, it also does so through an auction mechanism ; that mechanism implies both that no individual firm has any assurance of access to federal reserve liquidity and that the aggregate amount of funds provided through open market operations does not bear any direct relationship to dealers'funding needs. the federal reserve does not have legal authority to lend to firms other than depository institutions in routine circumstances. moreover, given that dealers are not subject to the type of regulation and supervision applied to banks, routine lending to such firms could lead to moral hazard, with dealers'access to central bank liquidity increasing their incentives to take excessive risks. thus, no regular standing facility for primary dealers is maintained, even though, like large commercial banks, primary dealers are highly leveraged, engage in significant maturity transformation, and are closely interconnected with the rest of the financial system. dealers ordinarily fund themselves primarily in the triparty repo market, borrowing heavily to finance their securities positions. however, during the financial crisis, dealers'access to triparty funding declined sharply. concerned with declining collateral values, repo counterparties increased required interest rates and ratcheted down the lendable values of collateral. as a consequence, dealers were forced to dump assets on the market in fire sales, further driving down collateral values. to break this vicious cycle and head off the collapse of the financial system that

/ d533. pdf ; and board of governors of the federal reserve system, federal deposit insurance corporation, and office of the comptroller of the currency ( 2021 ), “ joint statement on crypto - asset policy sprint initiative and next steps, ” joint press release, november 23, https : / / www. federalreserve. gov / newsevents / pressreleases / files / bcreg20211123a1. pdf. see, for example, philip daian, steven goldfeder, tyler kell, yunqi li, xueyuan zhao, iddo bentov, lorenz breidenbach, and ari juels ( 2019 ), “ flash boys 2. 0 : frontrunning, transaction reordering, and consensus instability in decentralized exchanges, ” unpublished paper, cornell university, arxiv, april, https : / / arxiv. org / pdf / 1904. 05234. pdf ; raphael auer, jon frost, and jose maria vidal pastor ( 2022 ), “ miners as intermediaries : extractable value and market manipulation in crypto and defi, ” bis bulletin 58 ( basel, switzerland : bank for international settlements, june ), https : / / www. bis. org / publ / bisbull58. pdf ; paul barnes ( 2018 ), “ crypto currency and its susceptibility to speculative bubbles manipulation, scams and fraud, ” journal of advanced studies in finance, vol. 9 ( winter ), pp. 60 – 77 ; and felix eigelshoven, andre ullrich, and douglas parry ( 2021 ), “ cryptocurrency market manipulation — a systematic literature review, ” in icis 2021 proceedings on “ building sustainability and resilience with is : a call for action ” ( austin, tex. : international conference on information systems, dec. 12 – 15 ). - 6activities that are required to be separated in traditional financial markets. for example, some platforms combine market infrastructure and client facilitation with risk - taking businesses like asset creation, proprietary trading, venture capital, and lending. third, all financial institutions, whether in traditional finance or crypto finance, must comply with the rules designed to combat money laundering and financing of terrorism and to support economic sanctions. platforms and exchanges should be designed in a manner that facilitates and supports compliance with these laws. the permissionless exchange