Under this facility program, the Federal Reserve can auction term funds against a wide variety of collateral, thereby providing funds with longer maturities to more financial institutions. Moreover, it established foreign exchange swap lines with the European Central Bank and the Swiss National Bank, and based on this, U.S. dollar auctions were carried out in Europe.
It is of utmost importance to restore and preserve confidence in the resilience of the financial system as a whole. In this process, central banks play an important role, especially when it comes to mitigating systemic risks, nowadays known as macro-prudential regulation and supervision.