U.S. Fed lauds improved financial market conditions

CHICAGO (Reuters) - The U.S. Federal Reserve on Friday said that continued improvements in financial market conditions had lowered demand for many of its emergency liquidity programs.

In a monthly report on its balance sheet, the Fed cited dwindling participation in programs designed to backstop short-term credit markets.

The Fed also said that loan repayments to its AIG revolving credit facility were higher than drawdowns over the past four weeks.

The Fed has pumped more than $1 trillion into the U.S. financial system since the global credit crisis erupted in August 2007.

A sharp increase in the Fed's balance sheet, though, came mostly between September and November 2008 after credit markets became paralyzed following the bankruptcy of investment bank Lehman Brothers.

The Fed's total assets as of June 24 were $2.028 trillion, down $54 billion from May 27.

The central bank's efforts recently have concentrated on large-scale asset purchases -- Treasury debt, agency debt and agency-guaranteed mortgage-backed securities.

So far, about 84 percent of Treasury purchases have been in the two- to 10-year maturity range, and 13 percent has been in maturities greater than 10 years ,the Fed said.

The U.S. central bank has pledged to make more information available about its financial rescue activities, partly in response to Congressional pressure for more transparency.

Friday's was the second such monthly report.

The Fed said updated information on the Maiden Lane LLC facilities would be presented in the next monthly report, following quarterly revaluations.

The Maiden Lane facilities were created to support the merger of JPMorgan Chase & Co and Bear Stearns, and later to backstop the struggling insurance giant AIG.

Loan repayments by AIG in the current reporting period were $2 billion, against drawdowns of $1 billion, leaving a balance of $43 billion as of June 24.

(Reporting by Ros Krasny)