US Fed to end lending program
WASHINGTON
The U.S. Federal Reserve confirmed on Jan. 24 that it is ending a lending program set up to help banks in the aftermath of the rapid collapse of Silicon Valley Bank (SVB).
Regulators set up the program after a bank run on the midsized Californian lender in early March last year over interest rate concerns quickly spiraled into one of the most acute banking crises in years.
SVB's collapse swiftly caused the collapse of a number of regional banks and the merger under pressure of Swiss banking giant Credit Suisse with regional rival UBS.
The Bank Term Funding Program (BTFP) was set up for a period of one year to help banks repay creditors during periods of high demand for cash. It lent out more than $129 billion in 2023, according to the Fed.
On Jan.24, the U.S. central bank confirmed in a statement that the lending facility "will cease making new loans as scheduled on March 11."
"The program will continue to make loans until that time and is available as an additional source of liquidity for eligible institutions," it added.
After the worst of the banking crisis had subsided last year, U.S. regulators unveiled plans for new banking rules to mitigate against future failures.
The Fed said on Jan. 24 that the interest rate on any new loans made before the program ends on March 11 "will be no lower than the interest rate on reserve balances in effect on the day the loan is made."
The U.S. central bank also confirmed that banks would still be able to access lending through its regular discount window "to meet liquidity needs" once the program ends.
