The Fed Bank's new hedging mechanism could raise up to  $2 trillion

  • Facility unlikely to be used by biggest banks: JPMorgan strategist
  • Wrightson ICAP Sees Window, New Facility Utilization Increases $100 Billion
By Masaki Kondo and Alex Harris
Mar 15, 2023 8:45 PM PDT Updated Mar 16 2023 6:51 AM PDT
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Market watchers are wary of how much extra money the Fed's new bank support program will end up pumping into the system, with analysts at JPMorgan Chase & Co suggesting it could inject as much as $2 trillion in liquidity.

This is their best estimate. Analysts' forecast was closer to $460 billion based on unintroduced deposits at the six U.S. banks, which account for the highest percentage of total deposits. That's a small amount, but still substantial, compared with the historical use of the so-called discount window, another Fed tool that's often seen as stigmatizing and has historically led banks to A discount is applied to the borrowed amount provided as collateral.