US banks just tapped billions of dollars from a Federal Reserve program designed to ease and prevent stress in the system.
New data from the Federal Reserve Bank of New York shows banks borrowed $25 billion from the Fed’s Standing Repo Facility (SRF) on December 1st.
It marks the second-highest daily usage since the SRF’s launch in July of 2021, with only a record $50.35 billion on October 31st topping it.
The facility lets banks instantly swap securities like Treasury bonds for cash overnight at a low fixed rate, and its abrupt use happened amid month-end rebalancing, large Treasury settlements, spiking repo rates, declining bank reserves and the end of the Fed’s quantitative tightening campaign.
The move signals potential liquidity pressures, showing banks struggled to easily source cheap overnight cash in private markets.
Last month, New York Fed Manager Roberto Perli urged banks to borrow from the facility when necessary.
“It is desirable and fully expected that the [Standing Repo Facility] be used whenever it is economically sensible to do so.
Our counterparties participated in large scale in the repo operations that the Federal Reserve offered in the past. If it makes economic sense, there is no reason why sizeable participation cannot take place.
If repo pressure persisted, or intensified, I do expect that the SRF will be used more broadly and to a much larger extent, thus dampening the upward rate pressure.”
Follow us on X, Facebook and TelegramDon't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney
