Bank Term Funding Program:
The Bank Term Funding Program (BTFP) was created to support American businesses and households by making additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. The BTFP offers loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging any collateral eligible for purchase by the Federal Reserve Banks in open market operations (see 12 CFR 201.108(b)), such as U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.
|Bank Term Funding Program (BTFP)||$11.943 billion||$53.669 billion||$64.403 billion||$64.59588 billion||$79.021 billion|
- Association, or credit union) or U.S. branch or agency of a foreign bank that is eligible for primary credit (see 12 CFR 201.4(a)) is eligible to borrow under the Program.
- Banks can borrow for up to one year, at a fixed rate for the term, pegged to the one-year overnight index swap rate plus 10 basis points.
- Banks have to post collateral (valued at par).
- Any collateral has to be “owned by the borrower as of March 12, 2023."
- Eligible collateral includes any collateral eligible for purchase by the Federal Reserve Banks in open market operations.
- Report to Congress Pursuant to Section 13(3) of the Federal Reserve Act: Bank Term Funding Program.
- As of March 31, 2023: The total outstanding amount of all advances under the BTFP was $64,595,880,000.
- The total value of the collateral pledged to secure outstanding advances was $79,569,489,000.
Why does this matter?
- A new data point for tracking value borrowed outside what the Fed provides on its snapshot balances.
- Plus, this gives us the value of the 'collateral' pledged as well.