An abbreviation for asset-backed commercial paper money market fund liquidity facility; funding that is provided at a discount rate to institutions in order to buy asset-backed commercial paper (ABCP) from money market funds. This facility allows money market funds to meet redemptions.
It was introduced to help money market mutual funds (MMMFs) that hold asset-backed commercial paper (ABCP) meet investors’ demands for withdrawals, and to boost liquidity in the ABCP market and money markets in general. Without enhanced liquidity in the money markets, forced sales of ABCP will depress the prices of ABCP and other short-term instruments, ending up with recurring losses in MMMF investments and even spurring further redemptions. Had it not been for AMLF, investor would have lost confidence in MMMFs and the financial markets.
