The Commercial Paper Market, the Fed, and the 2007-2009 Financial Crisis

Abstract

Since its inception in the early nineteenth century, the U.S. commercial paper market has grown to become a key source of short-term funding for major businesses, with issuance averaging over $100 billion per day. In the fall of 2008, the commercial paper market achieved national prominence when increasing market stress caused some to fear that, given its size and importance, the market’s failure would sharply worsen the recession.