Finally, especially in countries where debt markets are not well developed, central banks might be called upon to finance budget deficits by printing money, again interfering with maintaining price stability. The Federal Reserve, for example, was asked to directly underwrite government debt during World War I, but a statutory prohibition on directly purchasing government debt was later added to the Federal Reserve Act.
The use of instruments devised to that end injected liquidity through a lower primary issue of our notes, the early repurchase of those bills in the secondary market and the full availability of repos (one-, seven- and sixty-day credit lines to commercial banks in need of liquidity), both at fixed and variable rates.