The Federal Reserve announced an emergency lending facility on Sunday to shore up the US banking system after the implosion of Silicon Valley Bank led to fears of contagion.

In a statement, the Fed said it would make additional funding available to eligible depository institutions to “help assure banks have the ability to meet the needs of all their depositors” and that it is “prepared to address any liquidity pressures that may arise”.

It added: “This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.”

In a joint statement issued alongside the new lending facility, the Bank Term Funding Program, Treasury secretary Janet Yellen, Fed chair Jay Powell and Martin Gruenberg of the Federal Deposit Insurance Corporation said that all depositors of Silicon Valley Bank would have access to their money on Monday.

All depositors of Signature Bank, which they said had closed, would also be paid in full.