What does AMLF mean in UNCLASSIFIED
AMLF stands for the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility. Established in October 2008 as part of the U.S. government’s effort to mitigate the effects of the financial crisis, this facility was initiated by the Federal Reserve Bank of New York (FRBNY) to provide liquidity and stability to money market mutual funds during a period of market turmoil.
AMLF meaning in Unclassified in Miscellaneous
AMLF mostly used in an acronym Unclassified in Category Miscellaneous that means ABCP MMMF Liquidity Facility
Shorthand: AMLF,
Full Form: ABCP MMMF Liquidity Facility
For more information of "ABCP MMMF Liquidity Facility", see the section below.
Impact
The impact of this program was immediate and significant. After its establishment in October 2008, ABCP outstandings declined by nearly $300 billion dollars from September 2008 levels over the following two months due largely in part to banks taking advantage of FRBNY’s generous terms and readily available liquidity resources provided through AMLF loans. As a result, investors were once again willing to purchase ABCP at competitive spreads relative to other short term investments such as Treasury Bills which further reduced pressure on money market mutual funds during a time when they were already facing intense stress from investor redemptions stemming from falling asset prices and increasing default risks.
Essential Questions and Answers on ABCP MMMF Liquidity Facility in "MISCELLANEOUS»UNFILED"
What is the ABCP MMMF Liquidity Facility?
The ABCP MMMF Liquidity Facility (AMLF) is a program created by the U.S. Federal Reserve Board in response to the global financial crisis of 2008. The program provides additional liquidity to money market mutual funds, which help corporations, individuals, and organizations fund their operations on a short-term basis. The AMLF was established in order to inject confidence into these markets and to ensure that they remain stable during turbulent economic times.
How does the AMLF work?
The AMLF works by allowing money market mutual funds to borrow from the Federal Reserve Bank at a low interest rate through dollar-for-dollar collateralization of high-quality assets held by the fund. This helps money market mutual funds cover potential losses due to redemptions or other withdrawals without having to liquidate other assets in order to raise cash quickly.
Who is eligible for the AMLF?
In order to be eligible for the AMLF, a money market mutual fund must be registered with and regulated by either the U.S. Securities Exchange Commission (SEC) or Financial Industry Regulatory Authority (FINRA). The fund must also have obtained approval from its regulator prior to participating in this program.
What types of assets can be used as collateral for an AMLF loan?
Eligible collateral assets under this program are those which meet stringent quality requirements set forth by the Federal Reserve Board, including investment grade corporate bonds and government securities such as Treasury bills and notes. Money market funds may also pledge certain money market instruments such as commercial paper and banker’s acceptances as acceptable collaterals.
What are some advantages of using the AMLF?
There are several advantages of using the AMLF program, including access to an additional source of low cost funds; reduction of leverage; increased confidence in the markets; prevention of fire sales; and reduced risk.
Is there a limit on how much a fund can borrow through this facility?
Yes, each fund’s credit line is capped at 30 percent of its total net assets on any given day and up to $50 billion should all eligible money market mutual funds participate in this program.
How do I apply for an AMLF loan?
To apply for an AMLF loan, you must contact your primary regulator - either SEC or FINRA - directly or speak with one of their representatives who will provide more information about eligibility requirements and procedures.
Are there any fees associated with obtaining an AMLF loan?
No, there are no fees associated with taking out an AMLF loan. All borrowing costs are paid for by the Federal Reserve Bank.
What happens if I fail to repay my loan within its term limits?
If you fail to make payments on your loan within its term limits, then you will be subject to penalties imposed by both your primary regulator as well as any applicable local laws governing financial services agreements.
Final Words:
The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF) served an important role in stabilizing money market mutual funds during the height of the financial crisis in 2008-2009 providing short term liquidity while boosting investor confidence in these types of investments at an otherwise tumultuous time for global markets. While AMLF was ultimately terminated after fulfilling its purpose, it remains an important tool that can be utilized by national governments around the world if similar economic distress arises throughout global economies again in the future.
AMLF also stands for: |
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| All stands for AMLF |