How COVID-19 Will Change Finance: “Whatever It Takes“ Vs “Full Faith And Credit“

How COVID-19 Will Change Finance: “Whatever It Takes“ Vs “Full Faith And Credit“

Earlier this month, the Federal Reserve threw a lifeline to the Ford Motor Company (and other credit-challenged companies) by committing to buy Ford's bonds , recently downgraded to "junk" status.. The Fed's aim, broadly, is to stabilize the segment of the market that serves companies that are at highest risk as a result of the COVID-19 crisis.. The financial market has re-valued Ford's existing bonds, signaling easier access to capital, at a lower cost.. By committing its resources to buy Italian debt, the ECB signaled support for Italy with the aim of lowering its cost of issuing new bonds, and easing its access to the capital markets generally.. The Fed's intervention to support the market worked.. The Federal Reserve's actions are imbued with a powerful principle, known as the "Full Faith and Credit" of the United States of America.. "Full Faith and Credit" - sonorous language that is at least three hundred years old.. House of Representatives actually passed The Full Faith and Credit Act - intended to "permanently end the risk of the United States experiencing a sovereign default.". It can invest the Full Faith and Credit of the United States of America into the Quantitative