Fed Announces Additional Actions to Support Intraday Credit

The Federal Reserve tonight announced several temporary actions—which will take effect upon publication in the Federal Register—to increase the availability of intraday credit extended by the Federal Reserve Banks on both a collateralized and uncollateralized basis. These measures will remain in place until Sept. 30, 2020, unless the board communicates otherwise.

Specifically, the Fed said it will suspend uncollateralized intraday credit limits and waive overdraft fees for institutions that are eligible to participate in the primary credit program for the discount window. It will also permit a streamlined procedure for secondary credit institutions to request collateralized intraday credit. In addition, the Fed will also suspend two collections of information that it uses to calculate net debit caps.

The Fed noted that it “does not believe that these actions will meaningfully increase credit risk to Reserve Banks because the provisions will only apply to financially healthy institutions, and the majority of daylight overdrafts during the period are likely to be collateralized.” The Fed added that it will continue to monitor institutions’ eligibility for primary credit to manage the risk exposure to the Reserve Banks.