The Federal Reserve announced today it would offer a new line of credit to be used for the private purchase of money market instruments, a move it hopes will further ease liquidity strains in the short-term debt market. The Fed's new program, the Money Market Investor Funding Facility (MMIFF), is a credit facility that will allow private special purpose vehicles (SPV) to buy money market instruments. The Fed said these SPVs can buy certificates of deposits, bank notes and commercial paper with a remaining maturity of 90 days or less. The program is meant to compliment the Fed's new commercial paper funding facility established earlier this month, and is needed to ease strains in the short-term debt markets caused by the ongoing credit crunch. "The short-term debt markets have been under considerable strain in recent weeks as money market mutual funds and other investors have had difficulty selling assets to satisfy redemption requests and meet portfolio rebalancing needs," the Fed said. "By facilitating the sales of money market instruments in the secondary market, the MMIFF should improve the liquidity position of money market investors, thus increasing their ability to meet any further redemption requests and their willingness to invest in money market instruments."