liberty street economics, july 16, 2020. a listing of the new facilities with links to additional information for each facility can be found at the board of governors of the federal reserve system website at www. federalreserve. gov / monetarypolicy / policytools. htm. 6 the effects of the federal reserve ’ s actions in establishing these facilities on credit markets are discussed in nina boyarchenko, richard crump, and anna kovner, the commercial paper funding facility, federal reserve bank of new york liberty street economics, may 15, 2020 ; antoine martin and susan mclaughlin, the primary dealer credit facility, federal reserve bank of new york liberty street economics, may 19, 2020 ; nina boyarchenko, richard crump, anna kovner, or shachar, and peter van tassel, the primary and secondary market corporate credit facilities, federal reserve bank of new york liberty street economics, may 26, 2020 ; and marco cipriani, andrew haughwout, ben hyman, anna kovner, gabriele la spada, matthew lieber, and shawn nee, municipal debt markets and the covid - 19 pandemic, federal reserve bank of new york liberty 3 / 4 bis central bankers'speeches street economics, june 29, 2020. jerome h. powell, current economic issues, speech at the peterson institute for international economics, washington, d. c. ( via webcast ) ( may 13, 2020 ). 4 / 4 bis central bankers'speeches

the banks was stemmed by emergency loans from a consortium of private banks, called the new york clearing house. but a run on less regulated trusts, the “ shadow banks ” of that time, could not be similarly curtailed. 1 j. p. morgan brought together a group of young bankers, including benjamin strong, who would go on to become the first head of the new york fed, to examine the books of the trusts. they made loans to the trusts they judged solvent, but the knickerbocker trust, the second - largest in the country, did not make the cut, and its collapse precipitated panic throughout financial markets. to stem that panic, morgan and his banking colleagues lent more generously to the surviving trusts. 1 / 4 bis central bankers'speeches the consequence of these events was a severe recession, and the u. s. economy contracted more than 10 percent. as a result of the financial sector ’ s inability to contain recurring financial panics, congress realized the need for the public sector to step in, a process that led in 1913 to the creation of the federal reserve system. an unprecedented challenge returning to more recent events, as the pandemic began to unfold in the u. s., we saw intense strain and disruption to financial markets. in response, the federal reserve has taken a set of strong and decisive actions to supply liquidity and to assure the continued flow of credit in the economy. 2 the unique nature of this recession — a global pandemic — has required us to design an innovative response. some of our actions have the hallmarks of those taken during the 2008 financial crisis, but many more have required a fresh approach. as uncertainty about the coronavirus took hold, we saw disruptions in short - term funding markets. markets for treasury securities and agency mortgage - backed securities, which are normally highly liquid and form the bedrock of our financial system, nearly buckled under the strain of massive flows of funds in response to the pandemic. 3 it ’ s easy to think of financial markets as somewhat divorced from the real economy — most people will never need to worry about a spike in the repo rate or liquidity in the treasury market. but the reality is that like the events of 1907 — and more recently 2008 — turmoil in financial markets can have a devastating impact on the wider economy. if credit isn ’ t flowing, people can ’ t finance the purchase of a home, businesses can ’ t invest, and nonprofit