liquidity to the financial system. these actions, together with similar measures in many other countries, appeared to stabilize the situation and to improve investor confidence in financial firms. notably, spreads on credit default swaps for large u. s. banking organizations, which had widened substantially over the previous few weeks, declined sharply on the day of the joint announcement. going forward, the ability of the treasury to use the tarp to inject capital into financial institutions and to take other steps to stabilize the financial system – including any actions that might be needed to prevent the disorderly failure of a systemically important financial institution – will be critical for restoring confidence and promoting the return of credit markets to more normal functioning. as i noted earlier, the federal reserve has taken a range of policy actions to provide liquidity to the financial system and thus promote the extension of credit to households and u. s. department of the treasury, emergency economic stabilization act website. businesses. our recent actions have focused on the market for commercial paper, which is an important source of short - term financing for many financial and nonfinancial firms. normally, money market mutual funds are major lenders in the commercial paper markets. however, in mid - september, a large fund suffered losses and heavy redemptions, causing it to suspend further redemptions and then close. in the next few weeks, investors withdrew almost $ 500 billion from prime money market funds. the funds, concerned about their ability to meet further redemptions, began to reduce their purchases of commercial paper and limit the maturity of such paper to only overnight or other very short maturities. as a result, interest rate spreads paid by issuers on longer - maturity commercial paper widened significantly, and issuers were exposed to the costs and risks of having to roll over increasingly large amounts of paper each day. the federal reserve has developed three programs to address these problems. the first allows money market mutual funds to sell asset - backed commercial paper to banking organizations, which are then permitted to borrow against the paper on a non - recourse basis from the federal reserve bank of boston. usage of that facility peaked at around $ 150 billion. the facility contributed importantly to the ability of money funds to meet redemption pressures when they were most intense and remains available as a backstop should such pressures reemerge. the second program involves the funding of a special - purpose vehicle that purchases highly rated commercial paper issued by financial and nonfinancial businesses at a term of three months. this facility

or considering, securities lending. based on our interactions with colleagues in other central banks on the continent, the recent focus among african reserves managers has been on : ( i ) formalising the investment decision processes ; ( ii ) introducing the use of bond futures for efficient portfolio management ; and ( iii ) investigating the viability of including chinese bonds, onshore and / or offshore, into their reserves portfolios. work currently under way under the auspices of the committee of central bank governors of the south african development community ( sadc ) indicates convergence in reserves management practices in this sub - region of africa. the initial research results show that reserve management activity in the region is governed by proper policies and guidelines, and nearly all central banks have adopted strategic asset allocation ( saa ) frameworks. it also notes that there is a general approach of using tranching when constructing reserve portfolios. the saa framework determines tranche sizes where relevant. most central banks invest in cash, cash equivalents and fixed income instruments, with the us dollar and the euro being common currencies in all portfolios. challenges facing reserves managers with that contextual backdrop, and before moving on to discuss some of the challenges faced by reserves managers, it is worth reflecting on one of the consequences of the global financial crisis that we are still grappling with today. this is the deterioration in the credit quality of the reserve currencies. since 2008, using standard & poor ’ s ratings, we have seen the japanese government debt being downgraded from aa to a + and the us drop from aaa to aa +. within europe, while germany has remained aaa - rated, france was downgraded from aaa to aa and peripheral european countries such as spain ( from aaa to bbb + ) and portugal ( from aa - to bb ) saw an even more dramatic drop in their ratings. this narrowed the high - grade investment universe, requiring, in some instances, adjustments in investment guidelines to accommodate these changes. with issuers consequently falling outside the traditional investment universe, finding yield - enhancing assets became more difficult. these challenges persist and with the continued subdued global economic growth outlook are unlikely to go away anytime soon. moving on to developments that are more recent, and with reference to my earlier discussion on diverging monetary policies, the key challenges that reserves managers have been facing since the latter part of 2013 have been around the ongoing uncertainties on the timing of the rise in us interest rates and the negative yields in europe. this has