The US Federal Reserve on Tuesday unveiled a new credit facility to help households and business stay afloat as the coronavirus pandemic threatens to undermine the world's largest economy.

The program, authorized by the US Treasury, is aimed at commercial paper, which finances things like auto loans and home mortgages, a market that "has been under considerable strain in recent days as businesses and households face greater uncertainty in light of the coronavirus outbreak."

"By ensuring the smooth functioning of this market, particularly in times of strain, the Federal Reserve is providing credit that will support families, businesses, and jobs across the economy," the Fed said in a statement.

That in turn "will enhance the ability of businesses to maintain employment and investment as the nation deals with the coronavirus outbreak."

It is the latest in a series of moves the Fed has taken over the past two weeks to ensure the financial system has enough cash on hand to keep the economy from freezing up, including slashing the benchmark lending rate to zero, injecting $1 billion into financial markets this week and $1.5 trillion last week.

Treasury will provide $10 billion as a backstop, allowing the Fed to purchase commercial paper from US firms or US subsidiaries of foreign companies over the coming year.

"By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to once again engage in term lending in the commercial paper market," the Fed said.