Federal Reserve Board announces the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11
The Federal Reserve Bank had announced a Bank Term Funding Program as a result of the crisis at SVB Bank and Signature Bank.
An additional funding facility was made available - " Bank Term Funding Program (BTFP)" - to eligible depository institutions to help meet the funding needs of all their depositors. The facility will offer loans of upto 1Y pledging US Treasuries, Agency Debt, MBS and other qualifying assets. These assets will be valued at par.
Key Features:
1. Cease to make new loans on Mar 11, 24 and Ready access through the Discount window will be made available to banks at the current upper ceiling rate of 5.50%.
2. At the time of Facility introduction - The rate for term advances was at the one-year overnight index swap rate plus 10 basis point (currently - 1Y OIS Rate 4.81+0.10) which has now been revised to be "not lower than Interest Rate on Reserve Balances".
The BTFP window offered banks a good arbitrage opportunity as the Funds borrowed through the window could be placed with the Fed to earn IORB at 5.40%.
An additional funding facility was made available - " Bank Term Funding Program (BTFP)" - to eligible depository institutions to help meet the funding needs of all their depositors. The facility will offer loans of upto 1Y pledging US Treasuries, Agency Debt, MBS and other qualifying assets. These assets will be valued at par.
Key Features:
1. Cease to make new loans on Mar 11, 24 and Ready access through the Discount window will be made available to banks at the current upper ceiling rate of 5.50%.
2. At the time of Facility introduction - The rate for term advances was at the one-year overnight index swap rate plus 10 basis point (currently - 1Y OIS Rate 4.81+0.10) which has now been revised to be "not lower than Interest Rate on Reserve Balances".
The BTFP window offered banks a good arbitrage opportunity as the Funds borrowed through the window could be placed with the Fed to earn IORB at 5.40%.
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