extended under the program was about $ 50 billion. today, there is about $ 44 billion of talf credit outstanding. it is worth considering why the program was able to achieve such significant market improvements with a limited amount of balance sheet. the success of the talf may reflect that it targeted a market under severe stress, one characterized by extreme liquidity premiums that had caused asset prices to become detached from the underlying credit quality of the securities. under those conditions, our involvement was able to have a substantial effect, in part by pushing those markets back toward more normal functioning and pricing. to be sure, improvements in funding markets broadly and in the macroeconomic outlook during the course of the program clearly influenced the recovery of securitized credit markets. that said, the talf lending mechanism has been widely credited with helping to jumpstart those markets. as markets have improved and the liquidity premium on securitized credit has shrunk, the talf has become a less appealing source of funding. indeed, borrowers have been prepaying their loans as spreads have narrowed below the talf lending rate. at this point, those asset - backed securities markets that were supported by talf appear to be standing on their own. going forward, the securitized credit markets will be shaped importantly by regulatory efforts, with some potential changes such as risk retention and transparency requirements still undecided. defining the central bank ’ s role as liquidity provider let me now turn to the broader issue of the appropriate role of the central bank as a provider of liquidity during periods of market strain. in effect, both of the programs i have just discussed expand the reach of the federal reserve ’ s liquidity policies to a broader set of firms than those with access to our traditional discount window program. moreover, the federal reserve launched a number of other facilities during the financial crisis that reached other types of firms and markets. the scope and process for launching similar liquidity facilities in the future will be guided by the legislative efforts currently under way. still, it is important for the federal reserve to reflect on what we have learned through our experiences so that we may better judge the actions that should be taken in the future within that legislative structure. the liquidity programs that were launched by the federal reserve shared some common characteristics. in all cases, the programs provided credit in stressed markets, and for those facilities that offered credit at a predetermined interest rate, the rate was set at a penalty relative to normal

financial stress. the experience with the talf suggests that nonbank lending efforts can be successful at restoring market functioning and the flow of credit to firms and households. a second issue is the extent to which the federal reserve should be flexible in setting the structure of its liquidity programs to meet the needs of the market. as noted earlier, the talf did this in several ways, including its extension of the duration of the loans beyond the shortterm nature of most other liquidity facilities. that decision clearly improved the appeal of the program, suggesting that having some flexibility in structure can be beneficial. however, policymakers will have to decide the appropriate degree of flexibility to exercise in the future. of course, both of those dimensions — having a wide range of counterparties and using a more flexible lending structure — have the potential to increase risk to the central bank. the talf was able to offer credit on these terms without compromising the safety of the federal reserve ’ s balance sheet by requiring sufficient collateralization of the loans and by relying on the loss buffer provided by the treasury. without the treasury ’ s contribution to the program, it would have been more challenging to design a program that was both appealing to the markets and safe for the federal reserve. thus, a third open issue for future policies is determining the circumstances under which such cooperation between the monetary and fiscal authorities is appropriate. a final issue is that, if the central bank provides a back - up source of liquidity to the markets, whether through its traditional discount window function or these other facilities, it should consider the effects on the risk taking behavior of market participants. efforts should be taken to ensure that expectations of the availability of federal reserve lending facilities do not lead to excessive risk taking on the part of financial institutions. in the case of banking institutions, this moral hazard is offset by appropriate supervision and regulation. measures may be warranted for nonbank financial institutions if they expect federal reserve credit to be made available to them during times of stress. the interest income and fees that accrue to the federal reserve from these facilities are ultimately remitted to the us treasury. conclusion overall, recent financial market developments serve as a reminder that the central bank ’ s role as a liquidity provider can be critical during periods of financial stress. in this speech, i discussed the reintroduction of the liquidity swap lines with foreign central banks and reviewed our experience involving the talf — two programs that provide dollar liquidity to a broad set of counterpart