WHY WERE THE FED'S ACTIONS IMPORTANT? Steps taken by federal, state, and local officials to mitigate the spread of the virus limited economic activity, leading to a sudden and deep recession with millions of jobs lost. The Fed's actions ensured that credit continued to flow to households and businesses, preventing financial market disruptions from intensifying the economic damage. In many other countries, most credit flows through the banking system. In the U.S., a substantial amount of credit flows through capital markets, so the Fed worked to keep them functioning as smoothly as possible. As one of our colleagues, Don Kohn, former Federal Reserve Vice Chair, said in March 2020: "The Treasury market in particular is the foundation for trading in many other securities markets in the U.S. and around the world