Contents -- Glossary -- Executive Summary -- I. General Considerations -- II. Uncertainties -- A. Market Demand for Liquidity -- B. Functioning of Liquidity Distribution Networks -- C. Collateral: Adverse Selection and Gresham's Law -- D. Maturity Structure of Liquidity Demand -- III. Analysis of Recent Developments -- A. Liquidity Management -- B. Distribution Networks and Counterparties -- C. Collateral -- D. Term Operations and Monetary Policy -- E. Instruments "Stigma" -- F. Cross-border Liquidity Provision: Does the Cross-Border Market Matter? -- G. Innovations: Asset-based Operations (TSLF and SLS) and the PDCF -- IV. Exit Strategies -- V. Conclusions -- A. Liquidity Management -- B. Distribution Networks and Counterparties -- C. Collateral -- D. Term Operations and Monetary Policy -- E. Stigma -- F. Cross-border Liquidity -- Reference -- Tables -- 1. Counterparty Arrangements -- 2. Initial Participation in the Federal Reserve's Term Auction Facility -- 3. European Central Bank Weekly Main Refinancing Operation Marginal Rate vs. Coincident Market Rates Before and After the Crisis -- 4. Federal Reserve Bank Open Market Operations Collateral -- 5. Term Liquidity Bidders -- Figures -- 1. Composition of Collateral-Federal Reserve -- 2. Eligible Collateral by Asset Type, (LH) and Collateral Used (RH) -- 3. Composition of Collateral Used for Temporary Operations-Bank of Japan -- 4. Eurosystem Daily and Average Reserve Holdings -- 5. Total Domestic Portfolio -- 6. A Structure of Overall Liquidity Provision by Type of Operation -- 7. Bank of England OMOs: Monthly Average Amount Outstanding Central Bank Repos (2007-2008) -- 8. Term of Reserve Bank of Australia Repos 2007 -- 9. U.S. Dollar Short-term Rates -- 10. Spread Between Morning Rate and Federal Reserve Funds Target Rate.

11. Spread Between Federal Reserve Funds Effective Rate and Morning Rate -- 13. Three-Month LIBOR to Overnight Index Swap Spreads -- 14. United States: Selected Federal Reserve Policy Actions and Term Funding Stress -- 15. European Central Bank Main Refinancing Rate vs. Eurepo One Week and Euribor One Week -- Boxes -- 1. Reserve Flexibility Through Target Bands in the United Kingdom -- 2. The Term Auction Facility -- 3. Changes in the Monetary Policy Stance since July 2007 -- Appendixes -- I. Chronology of Central Banks' Response to Financial Turmoil During 2007-08 -- II. Detailed Chronology of Measures Taken by Central Banks.