It appears that these short-term funding markets remain an unstable source of funding in times of considerable financial stress. The Fed and other financial agencies have accomplished a lot in requiring or encouraging market participants to rely less on unstable short-term funding, but it is worth asking whether there may be other steps needed to secure these very important sources of liquidity.
A second lesson we learned last spring is that the Treasury market is not immune to the problems of short-term and dollar funding markets. In light of the importance of the Treasury market to many other financial markets as well as to monetary and fiscal policy, this further heightens the need to think about additional steps addressing vulnerabilities in short-term funding markets.