Federal Reserve puts $25 billion on the table to stop SVB contagion

Ticket board reactivated? – Divination or knowledge of rounds of interventionism central banks ? Anyway, in our recent article on Jerome Powell threatening (March 7, 2023) with put even more pressure on the rise in key ratesthe conclusion was premonitory : “Crisis of subprimes 2.0 in: 3, 2, 1… 2008we are back “. It would seem that the Federal Reserve (Fed) went very quickly from raise your voice on rising rates, to suddenly print in disaster to cover the collapse of Leman Brotherssorry, Silicon Valley Bank (SVB).


A few tens of billions from the Federal Reserve to avoid a crash?

On the side of the small world of Bitcoin (BTC) and cryptocurrencies, things calm down after the issuer of the stablecoin USDC, Circlewas reassuring about its ability to exchange each USDC for 1 US dollar.

But on the side of the banks, there was general panic after the descent into hell of the Silicon Valley Bank at the end of the week, strangled by the rapid rise in key rates. To the point that the bankers of the Federal Reserve exceptionally had to work on a Sunday, March 12, 2023. No time was to be wasted to announce magic money.

“The Federal Reserve Announces a Term Bank Funding Program (Bank Term Funding Program – BTFP) to support American businesses and households and ensure that banks are able to meet the needs of all their depositors. »

The Federal Reserve is canceling its Sunday to urgently release a financing program.
The Federal Reserve stretches out the billions to try to salvage the situation. Twitter account @federalreserve

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Did we come close to one bank run of anthology?

If the Fed showed up so eagerto the point of breaking his Sunday rest, is that it was necessary to intervene urgently to stop the panic spawned by Silicon Valley Bank. Because the MondayTHE banks were reopening their counters.

And without this funding program of $25 billion intended to support banks and other depository companies, how to say… The bank run was a catastrophic option absolutely conceivable.

“With the approval of the Secretary of the Treasury, the Treasury Department will make available up to $25 billion from the Exchange Stabilization Fund as collateral for the BTFP. (…) These measures will reduce stress within the financial system, support financial stability and minimize the impact on businesses, households, taxpayers and the economy in general. »

Excerpt from the Fed statement this Sunday, March 12, 2023. – Source: federalreserve.gov

We certainly do not done seeing the repercussions of this Silicon Valley Bank affair. As banks and financial markets began to reopen on Monday, we can see stabilization of the situation – at least, at the time of this writing. Has the Federal Reserve succeeded in stop the bleeding with his billions? We remain on deck to inform you in this restless mother!

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