World News

Federal Reserve eases bank access to intraday Fed credit

By Pete Schroeder

WASHINGTON (Reuters) – The U.S. Federal Reserve on Thursday temporarily eased requirements for banks to access intraday credit from Fed banks to ensure that lending continues during the coronavirus pandemic.

The Fed said in a statement it was temporarily waiving limits on uncollateralized intraday credit and overdraft fees for banks that are eligible for its primary credit program. And it also streamlined the process for secondary credit banks to seek collateralized credit.

The moves are not expected to increase credit risk to the central bank, and should help encourage banks to rely on the Fed for any day-to-day credit needs during a tumultuous time, it said.

“These actions are consistent with and indeed reinforce the Board’s efforts to encourage regular use of intraday credit by healthy financial institutions,” the Fed said.

It noted that some banks “may face unanticipated intraday liquidity constraints” as a result of the coronavirus pandemic and the ensuing economic disruptions.

All changes will remain in place until the end of September, and should not “meaningfully increase credit risk” to the Fed, it added.

(Reporting by Pete Schroeder in Washington; Editing by Matthew Lewis and Richard Chang)