American banks tapped a record $164.8 billion from the Federal Reserve System (Fed) during the seven days ending March 15, a figure Bloomberg calculated using regulator data in the wake of Silicon Valley Bank’s (SVB) collapse. The surge underscores the extraordinary steps banks took to secure liquidity as the stress in the banking sector intensified.
About $152.8 billion of that was borrowed through the Fed’s discount window for maturities up to 90 days, a facility designed to provide short-term funding to commercial banks facing temporary liquidity squeezes. A week earlier, banks drew roughly $4.58 billion from the same facility, a sign of rapidly shifting funding needs amid ongoing market volatility [Bloomberg].
The prior peak for Fed lending to banks occurred during the 2008 financial crisis, when institutions obtained about $111 billion from the central bank, marking a historic level of emergency liquidity support. The present context reflects a renewed, albeit different, form of systemic stress where liquidity access became a focal point for sustaining day-to-day operations and preserving confidence in the U.S. banking system [Bloomberg].
Meanwhile, the Federal Deposit Insurance Corporation (FDIC) reported late last week that SVB, once a prominent lender with substantial assets, faced a collapse that placed it 16th among U.S. banks by asset size. SVB’s default stands as the largest bank failure in more than a decade and a half, highlighting how swiftly the financial landscape can shift under pressure and the importance of robust supervision and resolution mechanisms [FDIC].
Across the Atlantic, Switzerland’s Credit Suisse announced it would borrow up to 50 billion Swiss francs (roughly $53.7 billion) from the Swiss National Bank, signaling a parallel concern about liquidity among major financial institutions in different jurisdictions. The move reflects how swift liquidity access remains a critical tool for stabilizing markets when confidence falters and operations are challenged by rapid changes in risk sentiment [SNB].
In global markets, the week saw enormous volatility tied to SVB’s bankruptcy, with Bloomberg estimating a total loss of about $465 billion across the world’s financial markets in just two days. The rapid re-pricing of risk, widening credit spreads, and shifts in investor behavior illustrate how a single major failure can ripple through markets, prompting central banks and regulators to act decisively to contain contagion and support market functioning [Bloomberg].