Shihua Financial News The Federal Reserve announced on the 13th that it had provided an additional US$50 billion in funds to commercial banks through short-term loan auctions on the 12th to increase market liquidity.
According to a report by Xinhua News Agency on August 14, the U.S. Federal Reserve announced on the 13th that the Federal Reserve had provided an additional US$50 billion in funds to commercial banks through short-term loan auctions on the 12th to alleviate the still severe crisis. Credit crunch situation. This is the 19th loan auction held by the Federal Reserve since the short-term loan auction mechanism was established in December 2007. In this way, the Fed has provided $960 billion in funding to commercial banks to date.
Over the past few months, the size of the funds provided by the Fed in auctions has continued to expand. The first two auctions offered loans of $20 billion each, followed by four auctions that increased to $30 billion each. Beginning in March 2008, loans provided at each auction rose to $50 billion. In May, the Fed further increased the size of the auctions to $75 billion each. At the end of May, the Federal Reserve also announced that it would increase the number of auctions in June from two to three per month.
On July 30, the Federal Reserve established a loan auction mechanism with a term of 84 days as a supplement to the existing loan auction mechanism with a term of 28 days. The Federal Reserve announced that loan auctions will still be held every two weeks in the future, and the two types of loan auctions will be held alternately. Loan auctions with 28-day terms will provide reduced amounts of funding. On August 11, the Federal Reserve held its first 84-day loan auction, providing $25 billion in funds.
The establishment of the short-term loan auction mechanism in the United States gives commercial banks a new way to obtain short-term loans from the central bank. The Fed hopes that this measure will stimulate lending activities among commercial banks and commercial banks' lending activities to individuals and businesses, thus easing the credit crunch.