The United States Federal Reserve has launched a $25 billion funding program for banks and other depository firms to maintain liquidity as a wave of industry shutdowns has covered another bank

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In a Mar. 12 statement, the US Federal Reserve Board announced the creation of a $25 billion Bank Term Funding Program (BTFP). The support program offers loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions.

The initiative is aimed at helping banks with possible liquidity issues at times when industry turmoil has already wiped out the Silicon Valley and Signature Banks’ assets, forcing them to leave the market.

The new funding source would become an alternative for banks facing financial stresses instead of inevitably selling their securities. Eligible firms must pledge U.S. Treasurys, agency debt and mortgage-backed securities or other qualifying assets as collateral if they want to avail of the loan. The given securities will be valued “at par” — the price at which the assets were issued, which makes the offering quite a deal.

The news arrived on the same day New York financial regulator NYDFS?closed Signature Bank, known to serve a number of crypto firms, “to protect the U.S. economy and strengthen public confidence in the banking system”.

A few days ago, Silicon Valley Bank (SVB) announced a sale of assets and stocks to raise additional capital, which ultimately only sped up the institution’s collapse. The bank’s dire situation was aggravated by the stablecoin issuer Circle’s disclosure of a?$3.3 billion deposit in SVB.

A domino effect observed in the banking industry traces back to the collapse of Silvergate – crypto-friendly bank associated with the infamous FTX and Alameda.