The Fed said that banks averaged $105 million in borrowing for the week ended on Wednesday. That was the lowest borrowing since it averaged $23 million for the week ended March 12, 2008, before the credit crisis struck with full force.

Loans from the central bank's emergency lending program, known as the discount window, had surged to a high of $110 billion a day during the height of the financial crisis in the fall of 2008. At the time, banks found their customary sources of credit frozen.

The $105 million average borrowing for the week ended Wednesday was down from an average of $678 million in borrowing for the previous week.

With financial and economic conditions improving, the Fed has been winding down its special lending programs.

The largest of these efforts is a $1.25 trillion program to purchase mortgage-backed securities issued by Fannie Mae and Freddie Mac in an effort to lower mortgage rates and provide a boost to the depressed housing market.

The new report showed that those holdings averaged $1.11 trillion daily for the week ended Wednesday, up by $138 million from the average for the previous week.

Some economists have worried that mortgage rates would start rising once the Fed's purchases of mortgage-backed securities end.

But Fed officials have stressed that even after new purchases end, the central bank will be holding a sizable portfolio of these types of securities that will continue to provide support for the mortgage market.

The European debt crisis has also pushed mortgage rates down in the United States as investors have moved their money into the safety of US assets.

Freddie Mac reported Thursday that the national average for 30-year fixed-rate mortgages dipped this week to the lowest level of the year, declining to 4.72 percent, down from 4.79 percent last week. The decline puts the rate just shy of the record low of 4.71 percent set last December.

Meanwhile, the Federal Reserve on Monday will conduct the first test of a new tool intended to soak up the huge amounts of money it has injected into the US economy.

Under the program, the Fed will offer banks the opportunity to purchase the equivalent of certificates of deposit.

The so-called "term deposits" will pay interest and provide banks with an incentive to keep their money at the Fed. Otherwise, circulating it through lending could cause higher inflation.

In an effort to combat the financial crisis and stimulate the economy, the Fed cut a key short-term interest rate to a record-low rate of nearly zero. It also pumped about $1.5 trillion of extra funds into the financial system.

Once the economy is on firmer footing, the term deposits program will be one of the Fed's tools for reeling in that extraordinary stimulus.

The central bank said Friday that it will auction $1 billion of the so-called "term deposit" securities on Monday. The securities will mature in 14 days.

The central bank said last month that a second operation will be conducted on June 28 for 28-day deposits and a third will be held on July 12, offering 84-day deposits.

Amounts weren't provided for those operations.

The operations are intended as a test of the term deposit program.