FED added the equivalent of $12.7 million bitcoin to the financial system this week as an attempt to provide banking bailout so let’s find out more about it in the cryptocurrency news today.
The US Federal Reserve banking bailouts are getting stronger currently and that’s why the FED added the equivalent of 12.7 million Bitcoin and according to the reports in the Wall Street Journal, the intervention came in two parts; a 14 day repo that totaled up to $34.9 billion and also overnight repurchase agreements that totaled up to $76.9 billion. The federal reserve had to loan banks in order to stabilize the financial system.
The repo interventions usually take in Treasury and mortgage securities from the banks which are basically a short-term loan that is collateralized by the bonds. The goal is to ensure that the financial system is liquid enough and that the short-term borrowing rates will remain under control. In the report, we can also read that the FED is also buying Treasury bills to increase the size of the balance sheet and to make the financial system more liquid. These agreements have also been going on this year since the financial system started breaking in September.
The situation arose when piles of cash and securities met and resulted in more than $3 trillion in debt being financed every day. The banks are running low on cash reserves so now the repo market mess is clearly showing that the banking system lacks the boosters that are needed in times of turmoil since they are now relying on the FED to keep printing money to bail them out.
There is also currently an additional conflict between the central bank and the POTUS who is still trying to bring negative interest rates. The FED Chair Jerome Powell told the congress that the negative interest rates that are demanded by President Trump are not quite appropriate for the US economy since the FED has already cut rates three times this year. These signals cause the safe-haven assets such as gold to drop down this week and since the month started, the precious metal lost about 3 percent from 2019 high. Bitcoin followed and slid more than 5 percent this time last week.
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Stefan has been writing articles for DCForecasts since 2016 in-house full time. As one of our main cryptocurrency writers, he focuses on covering the latest cryptocurrency news, technical charts, price analyses of coins and press releases. When he is not exploring and covering the latest topics in crypto, you can find Stefan playing basketball, tennis or cycling.
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