In its latest move to cushion the economic shock caused by the novel coronavirus pandemic, the Federal Reserve announced late Wednesday that it would create a lending facility to help ease the flow of credit and meet demand for money market redemptions by households and businesses.

In a statement released at 11:30 p.m. ET Wednesday, the Fed's Board of Governors said the Federal Reserve Bank of Boston would administer a new Money Market Mutual Fund Liquidity Facility (MMLF) to "make loans available to eligible financial institutions secured by high-quality assets purchased by the financial institution from money market mutual funds."

The move is apparently aimed at ensuring that the nearly $4 trillion money market fund industry can weather sudden redemptions by investors amid a major correction on Wall Street and a sharp upsurge in layoffs caused by the coronavirus crisis.

The announcement followed one earlier in the day meant to backstop the market for commercial paper — unsecured promissory notes issued by businesses to meet such short-term liabilities as payrolls, accounts payable and inventories. And on Sunday, the central bank lowered its benchmark federal funds rate to near zero and pledged to purchase $700 billion in Treasury securities and mortgage bonds.

The actions by the Federal Reserve are similar to those taken during the 2008 financial crisis.

The late-night announcement followed another brutal day on Wall Street, with the Dow Jones Industrial Average tanking another 6% — a continuation of a series of sharp drops in share prices that began last month, wiping out three years of gains.

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