As part of operational testing of the Term Deposit Facility (TDF), the Federal Reserve plans to conduct a series of three weekly TDF operations in February that offer 21-day term deposits with an early withdrawal feature. Term deposits in this series will settle on the same day the operation is executed, eliminating the three-day lag between the execution of an operation and settlement in previous tests.
Individual operations in this series will be held on February 5, February 12, and February 19. The operations will offer 21-day, floating-rate deposits with the maximum individual award amount set at $20 billion, and the rate set equal to the sum of the interest rate on excess reserves (currently 25 basis points) plus a fixed spread of 3 basis points.
These operations are designed to ensure the operational readiness of the TDF and to provide eligible institutions with an opportunity to gain familiarity with term deposit procedures. Details for each of the weekly operations will be announced on the day prior to each operation on the Board’s website. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy.
Additional information, including the steps that institutions must complete to be eligible to participate in term deposit operations are available at http://www.frbservices.org/centralbank/term_deposit_facility.html.