3 By these augmented liquidity provisions and market function-enhancing interventions, the central banks effectively provided “catastrophe insurance,” or put-like options for a broad range of financial institutions to hedge against some unknown, possibly grave downside risks. In this way, these measures were intended to reduce the fear of “unknown unknowns”.
1  For a more detailed account on the topic, see Nishimura, K. G., “Unconventional Policies of Central Banks: Restoring Market Function and Confidence,” Remarks at the Panel Session “Monetary Policy Boundaries: Alternative Instruments and Policy Coordination” at the Money and Banking Conference sponsored by the Central Bank of Argentina on Sept.1, 2009, available online at http://www.boj.or.jp/en/type/press/koen07/ko0909a.pdf.