The Federal Reserve today announced that the Bank Term Funding Program will cease making new loans as scheduled on March 11. The program will continue to make loans until that time.
The BTFP was created after the Silicon Valley Bank and Signature Bank failures to provide an additional source of liquidity to financial institutions and address concerns about consumer confidence in deposits. After March 11, banks and other depository institutions will continue to have access to the discount window to meet liquidity needs, the Fed said.
As the program ends, the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made, according to the Fed. The rate adjustment ensures that the BTFP continues to support the goals of the program in the current interest rate environment. All other terms of the program are unchanged.
