ShreeMetalPrices: US Fed’s may Administer $2 trn in banking sector to relieve the credit crunch


After Silicon Valley (SVB) collapse, JPMorgan Chase & Co stated in a statement that the Fed emergency loans support. Bank Term Financing Program, can inject up to 2 trillion dollar into the United States(US) financial system to assist failing banks & ease the liquidity crunch.

The bank indicated in a note that the facility’s maximum utilisation is expect to be close to 2 trillion dollar. Because it is doubtful that the major banks will use it.

The Bank Term Financing Program of the Fed is anticipated to be heavily utilised. According to analysts in London under the direction of Nikolaos Panigirtzoglou.

The maximum usage anticipated for the facilities is close to 2 trillion dollar, “Although the biggest banks are improbable to tap the programme,” they said.

In an effort to stop the spread of the crisis caused by the swift failure of Signature Bank & Silicon Valley Bank. The Joe Biden administration launched an emergency rescue of the United States financial sector on Sunday evening.

The Bank Term Financing Program. A new initiative from the Federal Reserve to offer emergency loans to banks & other depository institutions, was made public (BTFP). With the new facility, financial institutions would be completely assured that they can “meet the requirements of all their depositors.”

Will the Fed increase interest rates in March?

The federal government sought to stop a quick sale of sovereign debt in order to raise money.
JP Morgan added that the US financial sector still has $3 trillion in reserves. The most of which are held by the biggest banks. There was tension

Due to increased liquidity brought on by the Fed’s interest rate increases last year. Bank deposits have been replaced by money-market funds.

According to JP Morgan strategists. The funding programme should be able to provide the banking system with adequate reserves to decrease reserve scarcity. And undo the tighten that has occurred over the previous year.

Every week when it released reports on its balance sheets. The Fed will publish the usage of the programme in aggregate form, the federal bank said in a report this week.

All eyes are on the Federal Reserve to decide whether it will raise interest rates once more in the wake of two bank failures within less than a week. In these turbulent times, Federal Chair Jerome Powell & his colleagues are unsure how to respond, particularly in light of the recent problems at Credit Suisse, the largest Swiss bank.

In response to ongoing inflation, Powell hinted last week that the central bank would speed up its interest-rate-hike campaign. Traders have begun pricing in a half-point increase in the benchmark rate of interest from its current range of 4.5-4.75 percent at the Fed meeting on March 21–22. As well as additional rate increases after that.

Since the turmoil at Credit Suisse has rekindled concerns about a banking crisis that may destroy the US economy, investors just see the coming week as divide among a smaller quarter-point boost and a halt. With rate cuts probable in the months to come.