The US Bank Term Funding Program (BTFP) is really of high standard this time. Central banks of other countries may follow suit. It is not like the bottomless rescue during the financial crisis.

Here is the interpretation

The Bank of America Term Funding Program (BTFP) is considered a high-level financial policy. The core purpose of the program is to fully protect the legitimate rights and interests of depositors and support deposit institutions to fully meet depositors' withdrawal requirements. Unlike the bottom-line rescue during the financial crisis, BTFP will never use taxpayer funds to rescue the market, nor will it protect senior managers of bankrupt banks, bank shareholders and unsecured bondholders.

BTFP allows deposit institutions to obtain liquidity by pledging qualified assets to the Federal Reserve or the FDIC, and promises that taxpayers do not need to pay any costs for rescuing bankrupt banks. The plan strictly controls the source of rescue funds, sends a clear signal that it does not rely on issuing more money to rescue banks without limits, and also reduces the public's concerns about paying for bank risks and inflation to a certain extent.

In addition, BTFP also guides the choice of deposit institutions by adjusting the interest rate of the rescue tool. According to data released by the Federal Reserve, the interest rate of BTFP is 4.83%, which is 8 basis points higher than the primary credit rate in the discount window during the same period, but 42 basis points lower than the secondary credit rate. This differential interest rate design is intended to encourage deposit institutions to choose safer assets for collateral and promote the recovery of market liquidity.

In short, the implementation of BTFP has received a positive response from the market, and central banks of various countries are likely to follow suit. The plan not only fully protects the legitimate rights and interests of depositors, but also clearly signals the policy of not relying on issuing more money to rescue banks without limits, which has a positive role in promoting the stability and development of the financial market.