A backstop can provide a temporary safety net or a permanent one. The Fed’s emergency lending powers are limited to “unusual and exigent circumstances.” Thus, backstops based on these powers must shut down when the crisis has definitively passed.
Will the Federal Reserve draw on btfp backstop funds?
With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds.
Did banks borrow $165 billion from two Fed backstop facilities?
WATCH: Banks borrowed a record high combined $165 billion from two Fed backstop facilities in the most recent week. Kriti Gupta reports. Source: Bloomberg
