JPMorgan Chase Suggests Fed Bank Backstop Could Inject $2T in Liquidity

Analysts at JPMorgan Chase suggests that a new Fed bank backstop could inject as much as $2 trillion in liquidity in the banking system.

The Fed hasn’t released the numbers but said they will publish weekly numbers using the same balance-sheet statement that it uses to reveal uptake of funding from the window.

The program was set up by the US government earlier this month after three banks went under, in an attempt to offer a lifeline to others on the brink.

Major lenders are unlikely to need to tap into the program, but it could provide important liquidity for smaller banking institutions.

The idea is to offer a way to reduce scarcity and loosen some of the tightening that’s taken place over the past year. The Fed also seems poised not to institute another planned interest rate hike next week, in the hope of stabilizing the banking sector.