MarkHarvey on Nostr: Usage of the Bank Term Funding Program (BTFP) increased to over $103 Billion last ...
Usage of the Bank Term Funding Program (BTFP) increased to over $103 Billion last week.
There appears to be no functional limit on how large the facility may grow, even though it was created with a headline number of just $25B.
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In 2022 and 2023, the Fed rapidly increased interest rates from 0% to over 5%.
The banks, which had bought US Treasury bonds prior to the interest rate hikes, are now significantly underwater on their investment because of the high interest rates which caused the value of their bond holdings to drop significantly.
The BTFP was created by the Fed to shore up the insolvent the banking sector after the bank failures in March which began with Silicon Valley Bank.
The BTFP allows US banks to post their underwater bonds as collateral and receive a cash loan at 100% of the bond's par value.
There appears to be no functional limit on how large the facility may grow, even though it was created with a headline number of just $25B.
_______
In 2022 and 2023, the Fed rapidly increased interest rates from 0% to over 5%.
The banks, which had bought US Treasury bonds prior to the interest rate hikes, are now significantly underwater on their investment because of the high interest rates which caused the value of their bond holdings to drop significantly.
The BTFP was created by the Fed to shore up the insolvent the banking sector after the bank failures in March which began with Silicon Valley Bank.
The BTFP allows US banks to post their underwater bonds as collateral and receive a cash loan at 100% of the bond's par value.