RBA’s Term Funding Facility Ends With A$21B Untapped or Repaid

• Published on
• 02 Jul 2021, 02:42 PM

By Sophia Rodrigues

(Sydney, July 2, 2021)—It might seem impossible to believe that any institution would refuse to borrow funds at a maximum rate of 25bps but it is exactly what seems to have happened.

The last date for accessing funds from the Reserve Bank of Australia’s Term Funding Facility ended on June 30, and A$21.28 billion was the gap between funding allowance and drawdown.

As of June 30, the total funding allowance was A$209 billion and the amount that was drawn down was A$187.72 billion.

At this point it is difficult to know whether the entire A$21.28 billion shortfall was made up of funds that were available at 10bps. This is because it is likely banks tapped their full allowance at 10bps and used some of it to repay the funds previously borrowed at 25bps from the initial allowance.

CB-Intel had flagged the possibility back in February that some banks may not draw their full allowance by the end date.

A smaller-than-expected tapping of the TFF means the RBA’s balance sheet would expand that much less, and in turn it could mean less transmission to lending rates.

However, this doesn’t mean monetary policy is any less supportive because the RBA is committed to bond purchase program and sees that as helping keep financial conditions highly accommodative.

--Contact: Sophia@centralbankintel.com