Fed moves to backstop municipal bonds as state and city finances are strained by pandemic

The Federal Reserve announced Friday that it will allow state and municipal debt as collateral in one of the emergency lending facilities launched this week, a move that could ease the funding strain faced by governments stretched by the coronavirus pandemic.

The central bank said that the move to allow short-term state and municipal bonds as collateral would “enhance the liquidity and functioning of crucial state and municipal money markets.”

This is a developing story.

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