The Federal Reserve's Response to the 2023 Banking Turmoil: The Bank Term Funding Program

November 2025

The Federal Reserve's Response to the 2023 Banking Turmoil: The Bank Term Funding Program

David M. Arseneau, Elizabeth Klee, Antonis Kotidis, and Michael Siemer

Abstract:

The Bank Term Funding Program (BTFP) was an emergency liquidity facility set up by the Federal Reserve in March 2023 following the failure of Silicon Valley Bank which experienced a classic bank run driven by weak fundamentals. This paper provides an in-depth discussion of the design and implementation of the BTFP and presents some evidence on program outcomes. It also quantifies how the lending terms compare to those of the Discount Window-the Federal Reserve's main standing liquidity facility. The BTFP successfully acted as a backstop source of funding for depository institutions with large unrealized securities losses and heavy reliance on uninsured deposits and, in doing so, helped to avert a potential systemic banking crisis. The program ceased issuing new loans in March 2024 and closed one year later as the last loans matured. All outstanding loan balances were repaid in full.

Keywords: Banking stress, Emergency liquidity facilities, Lender of last resort

DOI: https://doi.org/10.17016/FEDS.2025.099

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