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To support American businesses and households, the Federal Reserve Board announced on Sunday that it would make additional funding available to eligible depository institutions to help ensure banks’ ability to meet the needs of all their depositors. This action will enhance the banking system’s ability to keep deposits safe and ensure the ongoing provision of money and credit to the economy.
The Federal Reserve stands ready to relieve any liquidity pressures that may arise.
Additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), which allows banks, savings associations, credit unions and other eligible depository institutions to pledge U.S. Treasury, agency debt for periods of up to one year. Will offer loan. and mortgage-backed securities, and other eligible assets as collateral. These assets will be valued at par. BTFPs will be an additional source of liquidity against high quality securities, eliminating the need for an institution to quickly sell those securities in times of stress.
With the approval of the Treasury Secretary, the Treasury Department will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds.
After receiving a recommendation from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury Secretary Yellen, after consultation with the President, to enable the FDIC to complete its proposals for Silicon Valley Bank and Signature Bank Accepted Action A method that fully protects all depositors, both insured and uninsured. These actions will reduce stress in the financial system, support financial stability and minimize any impact on businesses, households, taxpayers and the wider economy.
The Board is carefully monitoring developments in the financial markets. The capital and liquidity position of the US banking system is strong and the US financial system is resilient.
Depository institutions can obtain liquidity against a wide range of collateral through the discount window, which remains open and available. In addition, the discount window will enforce margins similar to those used for securities eligible for BTFP, further increasing the lendable value at the window.
The Board is closely monitoring the state of the entire financial system and stands ready to use its full range of tools to support households and businesses, and will take additional steps as appropriate.
For media inquiries, please email [email protected] or call 202-452-2955.
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