As of Wednesday, financial institutions were lent almost $108 billion from the Fed's Bank Term Funding Program, according to data from the central bank.
Financial institutions are increasingly taking advantage of an emergency program created by the Federal Reserve in March after the collapse of California’s Silicon Valley Bank.
The Fed’s BTFP was created in March as a way to ensure institutions would be able to meet the needs of their depositors, and offers loans of up to one year in exchange for collateral such as Treasurys, plus agency and mortgage-backed securities. The program is intended to eliminate a financial institution’s need to rapidly sell securities, and is open to federally insured banks, savings associations, and credit unions, as well as the U.S. branches of foreign banks.
Now, banks’ use of the emergency BTFP facility “has been creeping up over time” because it offers relatively attractive financing when compared with the Fed’s discount window, said Thomas Simons, a U.S. economist at Jefferies JEF, +1.02%.
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