the approval of the treasury department, the primary dealer credit facility ( pdcf ) under our emergency lending authority in section 13 ( 3 ) of the federal reserve act. under the pdcf, the federal reserve provides loans against good collateral to primary dealers that are critical intermediaries in short - term funding markets. similar to the largescale purchases of treasury securities and agency mbs i mentioned earlier, this facility helps restore normal market functioning. in addition, under section 13 ( 3 ) and together with the treasury department, we set up the commercial paper funding facility, or cpff, and the money market mutual fund liquidity facility, or mmlf. both of these facilities have equity provided by the treasury department to protect the federal reserve from losses. indicators of market functioning in commercial paper and other short - term funding markets improved substantially and rapid outflows from prime and tax - exempt money market funds stopped after the announcement and implementation of these facilities. in mid - march, offshore u. s. dollar funding markets also came under stress. in response, the federal reserve and several other central banks announced the expansion and enhancement of dollar liquidity swap lines. in addition, the federal reserve introduced a new temporary repurchase agreement facility for foreign monetary authorities. these actions helped stabilize global u. s. dollar funding markets, and they continue to support the smooth functioning of u. s. treasury and other financial markets as well as u. s. economic conditions. as it became clear the pandemic would significantly disrupt economies across the world, markets for longer - term debt also faced strains. the cost of borrowing rose sharply for those issuing corporate bonds, municipal debt, and asset - backed securities ( abs ) backed by consumer and small business loans. effectively, creditworthy households, businesses, and state and local governments were unable to borrow at reasonable prices, which would have further reduced economic activity. in addition, small and medium - sized businesses that traditionally rely on bank lending faced large increases in their funding needs as they struggled with possible closure or substantially curtailed revenues. to support the longer - term, market - based financing that is critical to economic activity, the federal reserve took a number of bold steps. these steps were designed to ensure that credit would flow to borrowers and thus support economic activity. with credit protection provided by the treasury department, on march 23 the board announced that it would support consumer and 2 / 4 bis central bankers'speeches small business lending by establishing the term asset - backed

, and lower long - run operating costs. some argue that in certain markets, faster and more predictable processing will also reduce the capital and liquidity costs of operations. but upgrades are often costly, lengthy, and risky, particularly if the technology is still being proven, as is the case for dlt. network effects can also affect adoption, since multiple firms may all need to adopt a particular implementation of dlt in order to justify its use in a specific market. third, technical issues remain. practical issues such as whether a particular version of dlt will work for the intended purpose are still being explored. issues of reliability, scalability, and security remain very important. beyond these issues, standardization and interoperability across different versions of dlt will need to be addressed to allow technology integration and avoid market fragmentation. in general, industry members and technology providers recognize these important issues and have taken initial steps to address problems. it will be important to keep these 3 / 5 bis central bankers'speeches challenges firmly in mind as we move beyond experimentation and into the development and deployment of new products and processes. fourth, governance and risk management will be critical. for individual firms or clearing houses that adopt dlt as an internal technology upgrade, the governance and risk - management processes are likely to be internalized within existing organizations and be akin to other technology upgrades. however, if new networks of bilateral payment, clearing, and settlement are established, the new technology may involve tightly coupled protocols and operations. the safety of the overall design will depend on a highly interdependent framework. if automated risk management, smart contracts, and similar tools are deployed across a network, cascades of rapid and hard - to - control obligations and liquidity flows could propagate across a network and the financial system in response to events. this interdependence will likely call for creative organizational thinking to address the need for governance and strong risk management. finally, the legal foundations supporting dlt will need attention. deployments of dlt will involve firms, perhaps in different jurisdictions, with systems that record and transfer information and assets under existing legal frameworks. which bodies of law apply to the particular firms, assets, and activities will determine the associated rights and responsibilities when transfers are made, cleared, and settled. for example, whether and how banking, payments, securities, or commodities laws apply in a given context are likely to be important in designing systems and services and understanding their properties. and, as with any new technology