Use data to prove that the current financial market is facing a liquidity crisis!

1. Bank reserves fall below 3 trillion

-What is bank reserve?

The essence of a bank is to absorb deposits and issue loans. This means that not 100% of the money deposited into the bank is kept there, and of course, not 100% can be loaned out. A portion of the funds needs to be kept to handle cash withdrawals from depositors; otherwise, there would be a risk of a bank run.

-Why 30 trillion?

30 trillion is the market-recognized watershed between "Liquidity Abundance" and "Liquidity Tightness."
After the 2008 financial crisis, the Federal Reserve mandated that U.S. banks must maintain a reserve ratio of at least 8% for funds held at the Federal Reserve, which is approximately 2.5 trillion; if the ratio is 10%, it would be 3.1 trillion.
Federal Reserve officials estimate that $3 trillion is the threshold for the financial system's Liquidity, while the minimum line for sufficient Liquidity is approximately $2.7 trillion.

Currently, the Federal Reserve's bank reserve accounts have fallen to 2.8 trillion, which is the fundamental reason for market panic.

2. Secured Overnight Financing SOFR Rate

On October 31, the Secured Overnight Financing Rate (SOFR) surged 22 basis points to 4.22%, with the spread over the excess reserve rate widening to 32 basis points, the highest since March 2020.

The SOFR rate is the overnight borrowing rate between financial institutions in the United States, used to alleviate the short-term funding pressures of certain institutions.

The sudden spike in interest rates means that financial institutions have suddenly encountered a large demand for borrowing—there's a shortage of money!

3. Standing Repurchase Facility SRF

In October 2025, the Standing Repo Facility (SRF) was frequently used, with usage reaching $50.35 billion on October 24, setting a new historical record.

The standing repo facility, simply put, is where the Federal Reserve purchases government bonds from financial institutions and then returns them the next day, with the aim of providing short-term funding to financial institutions.

The SOFR rate and SRF can both indirectly confirm that the current U.S. financial system is short on cash!