{"id":11796,"date":"2024-03-12T08:33:53","date_gmt":"2024-03-12T03:03:53","guid":{"rendered":"https:\/\/bigbreakingwire.in\/bank-term-funding-program-update-ceasing-new-loans-adjusted-interest-rates-and-implications-for-market-stability\/"},"modified":"2024-03-12T08:33:53","modified_gmt":"2024-03-12T03:03:53","slug":"bank-term-funding-program-update-ceasing-new-loans-adjusted-interest-rates-and-implications-for-market-stability","status":"publish","type":"post","link":"https:\/\/bigbreakingwire.in\/bank-term-funding-program-update-ceasing-new-loans-adjusted-interest-rates-and-implications-for-market-stability\/","title":{"rendered":"Bank Term Funding Program Update: Ceasing New Loans, Adjusted Interest Rates, and Implications for Market Stability"},"content":{"rendered":"
<\/div>\n

The issuance of new loans under the Bank Term Funding Program ends as scheduled on March 11. Eligible institutions can continue accessing the program for additional liquidity until that date.<\/p>\n\n\n\n

\nhttps:\/\/twitter.com\/BigBreakingWire\/status\/1750356241296351653?t=n2Hv2Chy6dVsoMWERvOjGQ&s=19\n<\/div><\/figure>\n\n\n\n

During a challenging period last spring, the Bank Term Funding Program played a crucial role in maintaining banking system stability and supporting the economy. After March 11, banks and other depository institutions will still have access to the discount window for addressing liquidity needs.

To ensure continued support in the current interest rate environment, the interest rate for new BTFP loans issued until the program ends will not be lower than the interest rate on reserve balances on the loan issuance day. This adjustment takes immediate effect while maintaining all other program terms.

The BTFP, authorized under Section 13(3) of the Federal Reserve Act with Treasury Secretary approval, aimed to aid American businesses and households by providing additional funding to eligible depository institutions.

The program offers loans of up to one year to banks, savings associations, credit unions, and other eligible institutions. Any collateral eligible for purchase by Federal Reserve Banks in open market operations is accepted, valued at face value to provide liquidity against high-quality securities and reduce the need for rapid sales in times of stress.

Although the termination of the BTFP isn’t expected to immediately impact the market, banks retain access to funding through the discount window. However, concerns exist regarding potential downstream effects leading to a new crisis in the future.<\/p>\n\n\n\n

\n
NYCB and the CRE Crunch: Risks Across 10 Banks as BTFB Program Nears End Amidst Commercial Real Estate Turmoil<\/a><\/blockquote>