This first step toward stability was reinforced in early 2009 when Secretary Timothy Geithner initiated the stress test exercise to determine how much capital these firms needed to remain viable financial intermediaries and, perhaps as importantly, to share this information with markets.
First, a large set of counterparties has access to the Eurosystem’s refinancing operations. Second, a wide range of high-quality collateral is eligible for Eurosystem operations. Third, the operations are of sufficient size to effectively facilitate the redistribution of liquidity among banks. The Eurosystem’s operational framework has proved sufficiently flexible and effective in dealing with the money market tensions caused by the financial market turmoil.