Bank borrowing from the Federal Reserve's new Bank Term Funding Program jumped by more than $40 billion week over week while discount window lending declined by over $42 billion during that same period.

According to Fed data through March 22, Bank Term Funding Program (BTFP) borrowing jumped to $53.67 billion, up from $11.94 billion the week prior. Discount window borrowing declined to $110.25 billion from a record high of $152.85 billion last week.

The BTFP was created in the wake of recent market turmoil following two bank failures that led to concerns about banks' liquidity. The program is intended to ease potential consumer concerns by providing additional liquidity against banks' securities so they do not have to sell those quickly in times of stress.

The latest data is a reversal of last week's trend and in contrast with what industry experts predicted.

Following the March 15 release that showed greater usage of discount window borrowing, experts attributed banks' preference for using that borrowing method over the new BTFP program to familiarity with the already-established borrowing option, the wider range of collateral options and the potential stigma associated with the new Fed program.

Discount borrowing is the Fed's traditional lending backstop for eligible banks and offers a wide range of collateral. The newly formed BTFP offers loans of up to one year that allow financial institutions to use US Treasurys, agency debt, mortgage-backed securities and other assets as collateral, which will be valued at par.

Exactly which banks have borrowed from the BTFP is unclear since the list of institutions will not be released until March 2025, one year after the program ends.

However, at least one bank has disclosed its participation. PacWest Bancorp disclosed that as of March 20, it had borrowed $10.5 billion from the discount window and $2.1 billion from the BTFP.