The Fed's program, called the Money Market Investor Funding Facility, is used to support a private-sector initiative designed to provide liquidity, or cash, to the money market industry.
The Fed backs purchases of short-term debt, including certificates of deposit and commercial paper that expire in three months or less, from money market mutual funds. The program launched on Nov. 24.
The Fed said Wednesday that it raised the possibility of expanding the program when it was announced on Oct. 21.
Besides broadening eligibility, the Fed said it approved other changes, including one dealing with the minimum yield on assets to be sold to the facility. Those changes are aimed at making sure the program is a "viable source of backup liquidity for money market investors" even as interest rates on those investments are very low, the Fed said.
The funds are large buyers of commercial paper and CDs, which historically are considered safe investments. However, the credit crisis has put money market mutual funds under pressure as skittish investors demand withdrawals.
