Federal Reserve emergency lending to banks, which hit record levels last week, remained high in the latest week, amid continued large scale extensions of credit to the financial system, which now includes official foreign borrowing.
The Fed reported that discount window borrowing, its main source of emergency credit to depository institutions, ticked down to $110.2 billion as of Wednesday, from the $152.9 billion reported last week.
The facility allows eligible financial firms to borrow against a range of bonds without the penalties normal imposed on this type of credit. Borrowing from the Fed caused the size of its overall balance sheet to move to $8.8 trillion from $8.7 trillion the prior week. Powell justified the fast-moving response of the central bank by saying “history has shown that isolated banking problems, if left unaddressed, can undermine confidence in healthy banks and threaten the ability of the banking system as a whole.”
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