The Federal Reserve Board announced on Sunday that it will provide additional funds to eligible deposit-taking institutions to help them meet the needs of all their depositorsa move that will support depositors and protect financial institutions, including SVB Finance Group SIVB Silicon Valley Bank.

The move aims to support American businesses and households by strengthening the banking system’s ability to secure deposits and ensure the supply of money and credit to the economy.

To achieve this, the Federal Reserve will launch a new Bank Term Funding Program (BTFP) that will offer loans with terms of up to one year to banks, thrifts, credit unions and other approved deposit-taking institutions.

The financing will be provided by pledging US Treasuries, government bonds, mortgage-backed securities and other qualifying assets as collateral.

The BTFP will be an additional source of liquidity for high-quality securities, eliminating the need for an institution to sell these securities quickly in times of stress.

The Department of the Treasury will provide up to $25 billion from the Exchange Stabilization Fund to backstop the BTFP.

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However, the Federal Reserve does not anticipate having to resort to these backstop funds.

According to a press release from the Federal Reserve Board, conditions are being monitored across the financial system and the Board stands ready to use its full toolkit to support households and businesses and will take additional steps as necessary.

These measures are aimed at relieving stress across the financial system, supporting financial stability and minimizing the impact on businesses, households, taxpayers and the economy at large, the board said.

The Federal Reserve Board assured that US capital and liquidity positions…