The Federal Reserve continued its efforts to soften the impact of the coronavirus on the U.S. economy by re-opening its crisis-era primary dealer credit facility to provide short-term loans to banks and broker-dealers.

“The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households,” the Fed said in a statement Tuesday.

The PDCF hopes to offer liquidity to the heart of the economy by offering loans and temporarily absorbing collateral.

The facility allows the New York Fed to offer loans of up to 90 days to the largest providers of liquidity to the financial system. Under the system, banks and broker-dealers access loans by offering up collateral for pledge.

The Fed says acceptable collateral will include investment grade corporate debt securities, international agency securities, commercial paper, municipal securities, mortgage-backed securities, and asset-backed securities.

The Fed will also take on equities, although exchange-traded funds, mutual funds, and unit investment trusts are not covered.

The overnight and term funding will begin on March 20 and the Fed has committed to keeping the facility open for at least six months.

Earlier in the day the Fed announced a commercial paper funding facility to provide funding directly to businesses looking for short-term funding.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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