The Impact of Tightening Monetary Policy on Bank Funding and Lending.

The decline in deposit funding in the US banking system has been offset by an increase in other forms of borrowing since the start of monetary policy tightening in March 2022. The most acute outflows were concentrated in super-regional banks following the run on Silicon Valley Bank in March 2023, with deposit funding amongst community and smaller regional banks remaining relatively stable. Banks were able to replace deposit outflows by making use of alternative funding sources, including the Federal Home Loan Banks and credit extended by the Federal Reserve.