Federal Reserve to Offer Seven-Day Term Deposits Through its Term Deposit Facility on August 11
August 08, 2016 / Source: Federal Reserve Board
The Federal Reserve plans to continue its previously announced periodic testing of the Term Deposit Facility (TDF) with one operation in August. These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a similar routine TDF test operation each quarter in 2016. The schedule and terms for future test operations will be announced at later dates.
On August 11, 2016, the Federal Reserve will conduct a floating-rate offering of term deposits with an early withdrawal feature through its TDF. The Federal Reserve will offer seven-day term deposits with a rate set equal to the sum of the interest rate paid on excess reserves plus a fixed spread of 1 basis point. The maximum tender amount per institution will be $5,000,000,000. The operation window will be open from 10:30 a.m. EDT to 12:30 p.m. EDT, and awarded deposits will settle the same day the operation is executed.