This week, data published by the Federal Reserve showed that banks borrowed a whopping $164.8 billion from two Federal Reserve backstop facilities, indicating escalated funding strains after the collapse of Silicon Valley Bank.
The traditional liquidity backstop for banks – the discount window – saw $152.85 billion in borrowing in the week ended March 15, the highest ever recorded, up from $4.58 billion the previous week. It's worth noting that the highest recorded borrowing through the traditional backstop was during the 2008 financial crisis, when it reached $111 billion.
In addition to borrowing from the traditional backstop, banks also borrowed $11.9 billion from the Fed's new emergency backstop known as the Bank Term Funding Program, which was launched on March 15.
The data shows a fragile banking system still dealing with deposit migration in the wake of the failure of Silicon Valley Bank of California and Signature Bank of New York last week. It is also worth noting that credit extensions totaled $142.8 billion during the week, reflecting lending by the Federal Deposit Insurance Corp. to bridge banks for SVB and Signature Bank.
While there was a considerable amount of borrowing from the Fed, money-market funds enjoyed $113 billion of inflows – the highest since April 2020 – while treasuries saw the biggest inflows since May 2022 with $9.8 billion in the week ending March 15.