© Reuters. Facade of the Federal Reserve Building (US Central Bank) in Washington, DC, with a photo from Reuters archive.
From Michael S. Derby
NEW YORK (Reuters) – Banks have sought emergency liquidity in record amounts over the past few days, following the collapse of Silicon Valley and Signature banks, data from the Federal Reserve showed, which in turn squandered months of efforts by the central bank to reduce the size of banks. his budget.
As of Wednesday, banks had accessed $152.9 billion, an all-time high, from the US central bank’s discount window, a traditional facility of last resort. It also obtained loans worth 11.9 billion from the bank’s term lending program that the US Central Bank recently introduced. Discount window borrowing surpassed the previous record of $112 billion in the fall of 2008, during the worst of the financial crisis.
Although the amounts of borrowing are large, some analysts felt comfortable with them and said that the matter reduces fears that the events of the past days will escalate to a level that could lead to the collapse of the entire economy.
“The numbers, as we see them here, are more consistent with the idea that this is just an isolated problem with a few banks,” said Thomas Simmons, money market economist at Jefferies investment bank.
He added that the government’s support efforts appear to be working, and the amount of money disclosed by the Federal Reserve on Thursday indicates that “it is not a huge problem at the system level.”
Increased emergency lending stopped the contraction of the Federal Reserve’s budget, and even marked growth.
After peaking near $9 trillion last summer before the central bank began taking action to reduce its holdings of mortgage-backed securities, total holdings fell to $8.39 trillion on March 8, before rising to about $8.7 trillion on Wednesday. It is the highest since November.
(Prepared by Doaa Muhammad for the Arabic Bulletin)
