Term auction facility

The Term Auction Facility is an instrument of monetary policy, introduced by the Federal Reserve to increase liquidity in United States financial markets. Although first instated as a temporary policy, as of 21 December 2007, the Fed will continue to hold bi-weekly auctions through the TAF.

Credit Crunch
Early in August, 2007, subprime crisis began to show in international finance. Two banks in Europe were the first to go into crisis and many more both in the US and abroad were presenting subprime lending on their balance sheets. The ECB began distributing funds through a fine-tuning operation. By August 9th, the ECB lent €95 billion ($112 billion in the days conversion) to EU banks, and the Fed distributed $12 billion through repo operations.