The Federal Reserve responded to these developments by providing reserves to the banking system; it announced a cut in the discount rate of 50 basis points and adjustments to discount window practices to facilitate the provision of term funding.
In the current episode, the disruptions in the structured finance, mortgage, leveraged loan, commercial paper, and interbank term funding markets made credit considerably less available for many households and businesses and thus, ultimately, represented a risk to the performance of our macroeconomy.