The theory behind the Federal Reserve’s actions was fairly clear: Arbitrage  5  A clear-cut assessment of the effects of the introduction of the “extended period” language, however, is complicated by the fact that the FOMC also decided at the March 2009 meeting to increase the size of the Federal Reserve balance sheet further by purchasing up to an additional $ billion of agency MBS, bringing its total purchases of these securities to up to $ trillion, and to increase its purchases of agency debt by up to $ billion to a total of up to $ billion.
6  BIS Review 66/2010  between short- and long-term markets is not perfect even when markets are functioning smoothly, and arbitrage is especially impaired during panics when investors are putting an unusually large premium on the liquidity and safety of short-term instruments.