Fed's bank funding program to stop making new loans in March

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve said its Bank Term Funding Program (BTFP) will cease making new loans on March 11.

The BTFP, which helped assure the stability of the banking system and provide support for the economy since spring last year, will continue to make loans until March and be available as an additional source of liquidity for eligible institutions, the Fed said Wednesday.

"As the program ends, the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made," the Fed said in a statement.

"This rate adjustment ensures that the BTFP continues to support the goals of the program in the current interest rate environment," it added.

US banks and other depository institutions will continue to have ready access to the discount window to meet liquidity needs after March 11, according to the Fed.