In the week of March 15, US banks borrowed a total of $164.8 billion using the Federal Reserve’s two backstop facilities.

Banks’ traditional liquidity backstop, also known as the discount window, saw a record borrowing of $152.85 billion, up significantly from $4.58 billion last week.

According to a report dated March 17, bloombergwhich surpasses the all-time high of $111 billion reached during the 2008 financial crisis.

Discount window borrowing hits all-time high
(Source: Bloomberg)

The Bank Term Funding Program, a new emergency backstop the Fed launched on Sunday, recorded $11.9 billion in borrowings, data showed. The total credit extended through both backstops highlights that the banking system is still fragile, suffering from deposit outflows resulting from the recent failures of California’s Silicon Valley Bank and New York’s signatory banks.

banking contagion

On March 16, the country’s largest banks agreed to deposit about $30 billion in First Republic Bank as part of a US government-led initiative to stabilize struggling California-based banks. bottom.

This exceeds the normal deposit insurance limit of $250,000 to protect all SVB and undersigned depositors following last weekend’s decisions by the U.S. Treasury Department and the Federal Deposit Insurance Corporation (FDIC).

However, Reuters reported that banks that bid for the signature, one of the distressed banks that had bank accounts belonging to Circle, would be forced to abandon crypto-related aspects of their business.

Circle, founder of USDC, the second largest stablecoin by market capitalization, managed to finally reach the $1.00 peg despite trading as low as 0.88 cents over the weekend. rice field.

READ MORE: Circle Says Virtually All USDC Minting, Redemption Backlog Will Be Resolved After Wild Week

“The trust, security and 1:1 redemption potential of all USDCs in circulation are paramount to Circle,” CEO Jeremey Allaire said on March 16. episode of the Bankless podcast.

“I am a very strong believer in full reserve banking,” Allaire added, adding, “The idea is that there is no need for a partial reserve, rather than a base layer of government obligations and a payment system built on top of it. It’s an innovation. It’s done over the internet using software.”

By Jules

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