Broad-Based Emergency Liquidity

New York Clearing House Association: The Crisis of 1893

Purpose

To “prevent contraction of loans if this drain goes on, at the same time showing the confidence the banks have in one another. More than this, it will be useful in inducing the clearing-house associations of other cities to take some similar course of united action” (Commercial and Financial Chronicle 1893, 1000)

Key Terms

  • Launch Dates
    Announcement: June 15, 1893; First issue: June 17, 1893
  • Expiration Date
    Last issuance: September 6, 1893; Last redemption: November 1, 1893
  • Legal Authority
    Complicated
  • Peak Outstanding
    $38.28 million on August 29, 1893
  • Participants
    NYCH member banks (65 member banks in 1893)
  • Rate
    6%, set by NYCH
  • Collateral
    Bills receivable, stocks, bonds, and other securities; 25% haircut
  • Loan Duration
    No set maturity
  • Notable Features
    Contagion from the western banks; suspension of convertibility
  • Outcomes
    Banking crisis contained, all CLCs retired within 5 months

Key Design Decisions

Purpose1

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Impact on Monetary Policy Transmission1

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Similar Programs in Other Countries1

Communication1

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Key Program Documents

Key Program Documents

Key Program Documents

Key Program Documents

Key Program Documents

Taxonomy

Intervention Categories:

  • Broad-Based Emergency Liquidity

Countries and Regions:

  • United States