Banking Practice Showdown 2026 – Vault into Your Future Success!

The Term Auction Facility (TAF) is designed specifically to allow depository institutions to borrow money for a fixed term by using a range of eligible collateral. This facility was established as a response to liquidity issues in the financial system, especially during times of financial stress. By offering loans in this auction format, the TAF enables banks to access funds while providing some security through collateral, thus enhancing overall market liquidity.

This option stands out because it directly addresses the borrowing needs of depository institutions with a focus on fixed-term loans and diverse collateral options. The Term Auction Facility promotes stability in the banking sector by allowing these institutions to meet short-term needs and manage liquidity more effectively.

In contrast, the other options serve different purposes: the Term Securities Lending Facility is more focused on securities lending, the Primary Dealer Credit Facility is aimed at supporting primary dealers specifically, and the Troubled Asset Relief Program is a broader financial support initiative that does not directly relate to fixed-term borrowing against collateral.