The US Central Bank (Fed) announced on Thursday that it has loaned nearly $12 billion to US banks since Sunday as part of its new system announced after the SVB bankruptcy so they can fulfill their clients’ withdrawal requests. On Sunday, the Fed promised to provide the necessary funds to banks in a joint statement with the Treasury Department and banking regulator FDIC. All three presented a range of measures aimed at reassuring individuals and businesses.
The monetary institution also said on Thursday that under its usual program of very short-term loans, it extended $152 billion to banks last week, up from barely $5 billion the previous week. Finally, $142.8 billion was provided to two entities set up by US regulators to replace Silicon Valley Bank (SVB) and Signature Bank, a New York-based brand automatically shut down Sunday by US regulators.
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The third bank is closed, the other remains
A third bank, Silvergate, close to the crypto community, has also closed. On Thursday, First Republic, the 14th largest US bank by assets and several days in trouble, was rescued by 11 major US banks. They pledged to pay a total of $30 billion in deposits.
He added $297 billion to the Fed’s balance sheet, which has been shrinking since June after buying shares during the Covid-19 pandemic, to fill the market with liquidity and keep it going.
This new increase in his balance sheet should affect the balance sheet on Tuesday and Wednesday, during the next Fed meeting, when it decides whether to raise rates again or not. Injecting liquidity into the economy goes against its current primary goal of curbing inflation.
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