The U.S. Federal Reserve is trying to keep the coronavirus crisis from becoming an extended financial crisis.
The Covid-19 outbreak brought the U.S. economy to a standstill. The sudden stop in business as usual prompted the U.S. central bank to act fast.
And the Fed’s measures go beyond anything the central bank did during the Great Recession of 2009.
The Fed is trying to keep liquidity flowing through financial markets. And in this context, liquidity basically refers to the amount of capital or cash on hand at America’s big banks and financial institutions. Without enough liquidity, the whole financial system can fall apart at the first hint of trouble.
Watch the video above to learn more about how the Federal Reserve is using its monetary policy tools to bolster the economy during a pandemic and what the central bank may do next.