Beyond the Federal funds rate: The Fed's policy toolkit Although the federal funds rate is now close to zero, the Federal Reserve retains a number of policy tools that can be deployed against the crisis. One important tool is policy communication.
The European rescue measures were motivated not least by the fact that the consequences of a disorderly sovereign insolvency were unpredictable. The fear of a further escalation of the financial crisis led to European taxpayers’ money being used as the first line of defence.