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U.S. regulators are reportedly considering “increasing” emergency lines of credit for banks, according to people familiar with the matter.
on Bloomberg on March 26. report Citing an unnamed source, U.S. officials were reported to be ruminating over what assistance, if any, they could provide to the First Republic, but that the “Federal Reserve “Expansion of” is one of the options being considered.
The First Republic reportedly said it was “stable enough to operate” by regulators without requiring “immediate intervention” as the bank made efforts to “strengthen its balance sheet.” It was considered that
Sources reportedly said the Federal Reserve’s liquidity offering would be expanded pursuant to the Banking Act, which requires it to be “widely based” and Although it stipulates that it is not intended to benefit any bank in the United States, they also state that the change is a “method of ensuring the interests of the First Republic Bank.”
Related: Burn First Republic and Credit Suisse
Despite First Republic facing structural problems on its balance sheet, “bank deposits have remained stable” and regulators have come to close Silicon Valley banks in a “sudden and serious crisis.” It is reported that there is no risk of experiencing a “runaway”. :
“We have the cash to meet the needs of our customers while looking for solutions,” said the person. That includes his $30 billion deposited by the nation’s largest bank this month. ”
This comes after the Fed announced plans on March 19 to strengthen liquidity terms through a “swap line.” It involves an agreement between two central banks to exchange currencies.
Coordinated Central Bank Actions to Strengthen USD Liquidity Offerings: https://t.co/Qs4cYY8BFO
— Federal Reserve (@federalreserve) March 19, 2023
“To improve the effectiveness of swap lines in U.S. dollar funding, central banks that currently offer U.S. dollar operations will reduce the frequency of seven-day operations from weekly to weekly,” the Federal Reserve said in a statement. We agreed to increase it by the day,” he said.
The swap line network, which includes the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss International Bank, will start on March 20th and run until at least April 30th.