8 The Federal Reserve permits purchases of debt issued or guaranteed by the U.S. government or government  agencies (such as agency debt and agency MBS). 9 This channel usually relates to signaling about short-term rates. A variant is to target longer-term interest rates  by a commitment to use balance sheet expansion if necessary. The ECB’s OMT program, created to purchase government bonds of euro-area countries that were granted financial assistance under certain conditions, was perceived as meaningfully reducing yields through commitment alone; no actual purchases were needed. In late September 2016, the Bank of Japan unveiled a new monetary framework called “quantitative and qualitative monetary easing with yield curve control” (QQEY). The new regime consists of two major components: (1) “yield curve control,” in which the BoJ will target both short-end interest rates (with the deposit rate at –0.1 percent) and long-dated yields (around 0 percent for 10-year Japanese government bond yield), and (2) an “inflationovershooting commitment,” which amounts to maintaining monetary expansion until the 2 percent inflation target is exceeded in a stable manner. 10 See the May 10, 2010 press release for the ECB’s Securities Markets Programme. 11 For example, the Federal Reserve chose to transact in the agency MBS market via external investment  managers at the start of LSAP I “as a means of implementing the MBS program quickly and efficiently while at the same time minimizing operational and financial risks.
In November 2008, there were significant dislocations in many financial markets, especially in the markets for the U.S. federal housing agencies’ securities. 23 In addition, the housing market was a focal point of the financial crisis. To help support the housing market and improve conditions in financial markets, the FOMC announced an LSAP program on November 25, 2008, that consisted of purchases of agency debt and agency MBS.24 The stated purpose of this program was to “reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally. "25 Research suggests that this program reduced “abnormal pricing” in agency MBS— the component of the spread considered to be due to market dysfunction—by about 70 basis points over its first six months.26 In that same time period, the spread of agency MBS repurchase agreements (repos) to Treasury repos fell from more than 200 basis points to near zero. In the framework noted above, this LSAP worked primarily through the market functioning channel. However, research also suggests that borrowing costs were lowered more broadly 27 6 / 10  BIS central bankers' speeches  through a portfolio balance effect.27 Overall, the Desk’s purchases, aided by the lowering of fed funds to the ZLB in December 2008, resulted in lower mortgages rates, which in turn reduced the cost of home purchases and allowed existing borrowers to refinance at more attractive terms.