Fed creates new liquidity backstop amid contagion fears
Valuing collateral at par marks significant break with rules on standard liquidity facilities
The Federal Reserve created a new emergency liquidity backstop on March 12, as fears grew that the collapse of Silicon Valley Bank (SVB) could trigger problems at other US lenders.
The Fed is offering loans of up to one year to banks and other depository institutions, accepting Treasuries, agency debt, mortgage-backed securities and other assets as collateral.
Notably, the US central bank will value these securities at par, rather than following the standard practice of imposing a haircut
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