By The amount of money that banks are borrowing from the Federal Reserve has seen a decrease for the first time in two months. However, there are still some institutions that require the support of the central bank.
In the seven days ending July 5, total bank borrowing fell by almost $1 billion, bringing it to $105.3 billion.
In light of the decline in investor deposits following the failures of several regional institutions, the Fed has been lending money to these affected banks. Silicon Valley Bank and First Republic Bank were among those that faced significant declines.
The majority of loans provided by the Fed have come from an emergency borrowing program established in March, shortly after SVB’s collapse. Last week, the total loans amounted to just under $102 billion, compared to $103.1 billion two weeks ago.
The purpose of the Fed program was to prevent bank runs and further failures. Its success is evident as no bank has failed since the end of April. However, there are still institutions that have not fully recovered.
The peak borrowing from the Fed reached $164.8 billion in mid-March. It then dropped to as low as $81.1 billion in early May before gradually increasing again.
It is worth noting that prior to the recent bank failures, borrowing was only at $15 billion.
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