Traditionally, when central banks respond to economic downturns, slashing policy interest rates makes for the headline act. This time, with rates already near zero at the onset of the crisis, rate cuts were only the warmup and, in some cases, didn’t even make the line-up. Instead, policy action by major central banks has in large part come in the form of a growing list of lending facilities. Many of the schemes – such as the BoJ’s “Special Operations” – are brand new. Some – including the Fed’s Commercial Paper Funding Facility – are GFC-era schemes that have come out of retirement. Other, existing facilities – like the ECB’s TLTROs – have been beefed up.
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