RICHMOND, Virginia (Reuters) – U.S. banks should be prepared to borrow regularly from the Federal Reserve’s discount window, while the Fed should make sure loans can be accessed at any time given changes in the speed of banking and transactions, Dallas Fed President Lorie Logan said on Tuesday.
The rapid run on and sudden failure of Silicon Valley Bank showed “how the combination of the rapid spread of information and the speed of financial transactions…put a premium on banks’ effective management of liquidity risks,” Logan said in comments at a Richmond Fed conference. “Every bank should be fully prepared,” to borrow from the Fed, Logan said, adding “our liquidity backstop should be available whenever” banks need it.
(Reporting by Howard Schneider; Editing by Andrea Ricci)