The Federal Reserve is about to take an unprecedented plunge into money markets. It plans to make it a limited-time offer, but the assets are so attractive that it may be forced to extend the life of the deal.

As soon as this year, Fed policy makers will greatly expand a $100 billion-dollar market for overnight loans known as reverse-repurchase agreements. They are designed to suck money out of the financial system so the Fed can raise short-term interest rates. They will also provide money-market funds and banks with safe investments that are now in short supply as financial-market reforms have heightened their need to hold exactly such assets.

The U.S. central bank's potentially gigantic footprint in money markets poses risks. Establishing a long-term presence could crowd out private borrowers who use the markets for everything from financing inventories to managing seasonal flows of cash.