The Federal Home Loan Bank System, often referred to as the silent stabilizer of the banking system, plays a crucial role in maintaining financial stability in the U.S.
A recent study by the Urban Institute sheds light on the significant impact of the FHLBanks in times of market stress and their role in providing liquidity support to local lenders.
The FHLBanks' funding strategies and advances underpin the nation's economy, supporting businesses, job creation, and homeownership.
Stabilizing Role
The FHLBanks act as a stabilizing force in the financial markets, providing certainty and liquidity during challenging periods.
Value to Member Banks
Member banks rely on FHLBank liquidity for cash flow, liquidity management, and risk management purposes, integral to their day-to-day operations.
Economic Impact
The FHLBank System's liquidity mission benefits the U.S. economy annually, saving homeowners billions in mortgage costs and contributing to overall financial stability.
- The study highlights that during financial stress periods, FHLBanks have been crucial in preventing bank failures through their liquidity support, ultimately benefiting the broader economy.
- The FHLBanks' role in providing cost-efficient credit to local lenders empowers communities, businesses, and homeowners, leading to a stable banking system.
The value of the Federal Home Loan Bank System, as underscored by recent studies, extends beyond monetary benefits to ensuring a resilient and diverse U.S. financial system that serves the economy effectively.