"Term Funding Facility" sound confusing? it's supposed to be

*puts on angry face*
SO (long story short) Australia's big bank(RBA) lends around $200 billion to the little banks (commbank, westpac etc.), gives them years to pay it off & then decides yknow what you only have to pay back 0.1% interest on that $200 billion, oh and of course you can do whatever you want with that money, like use to make more money than you are paying us back... (cough how is fractional reserve banking still a thing cough)
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"How the Term Funding Facility worked

The Reserve Bank of Australia (RBA) introduced the Term Funding Facility in March 2020. It offered to lend each bank, at a cheap interest rate, an initial amount (a “general allowance”) equal to 3% of the bank’s loans outstanding at that date.

An “additional allowance” was available if a bank grew its lending to businesses, particularly small businesses (where an extra A$5 was available for each A$1 loan growth).

The banks borrowed A$84 billion by September 2020. The RBA then put another A$57 billion of general allowances on the table. By the time it wound up the scheme in June 2021, the RBA had lent the banks A$188 billion. Of this, A$40-50 billion were “additional allowances” for expanded business lending.

The RBA initially offered these loans at a fixed three-year rate of 0.25%, equal to its overnight cash rate target. In November 2020 it cut the interest rate on new advances to 0.1%, in line with the cut in its cash and three-year-bond rate target.

This was well below the banks’ cost of funds from other sources, so it amounted to subsidised funding from the RBA — and ultimately the taxpayer. For example, had the RBA instead bought bonds issued by the banks in the capital market, it would have earned a higher rate of return, increasing its profits. This in turn would have helped reduce the government budget deficit and the need for tax dollars to fund that deficit.

Did business borrowers benefit?
My ballpark estimate of the value of the interest rate subsidy, meant to flow through the banks to business borrowers via lower cost lending, amounts to A$500-A$600 million a year for three years. This estimate is based on comparing the cost of three-year debt financing by the banks from the capital market with the TFF rate.

The four big banks — ANZ, Commonwealth, NAB and Westpac — got about 70% of this.

If the banks fully passed this subsidy on to who it was intended to help — businesses needing cash to stay afloat or expand — there wouldn’t be anything to consider here. But the meagre publicly available evidence provides no confidence they did.."
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A billion dollar cash grab in the midst of a global pandemic, arent you glad we put our trust in the RBA.....
*facepalm*
Our Country sure could have used that money extending job keeper & pandemic support payments but hey guess thats why im not Australia's Treasurer..

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