- This will help them cope with the lack of liquidity
- And calm the market as a whole
US financial regulators (DOJ, FDIC and Fed) issued a joint communiqué about the situation in the banking sector. Recall that on Friday Silicon Valley Bank declared itself bankrupt. It was the biggest collapse of an American bank since 2008. And it led to massive unrest among companies and ordinary investors.
In response, the Federal Reserve Board will provide $25 billion to fund banks and other depository firms. This program is called BTFP (Bank Term Funding Program) and will allow institutions to take out term loans with repayments up to 1 year. Banks may offer treasury bonds, debt securities, and other securities as collateral.
The goal of the BTFP program is to provide sufficient liquidity to meet customer requests should they wish to withdraw funds.
This news and other US measures had a positive impact on the markets. The bitcoin rate grew by 9% by morning, stocks and other cryptocurrencies are also recovering.
The CME expects the Fed to raise rates by a projected 25 basis points this month with an 82.6% chance. But other commentators believe that the Fed may delay any increase until next month due to unrest in the banking industry.
The Fed will make its decision at a meeting on March 22. Interest rates currently range from 4.5% to 4.75%, the highest since October 2007.
