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Working Paper
Discount window borrowing and the role of reserves and interest rates
The Federal Reserve’s discount window is a tool that can provide reserves to banks at a rate set by the Federal Reserve, the discount rate. During the past several years, there have been large fluctuations in the level of reserves in the banking system and in the level discount rate relative to other interest rates. In this paper, we explore how banks’ holdings of reserves, especially relative to the amount of reserves that banks prefer to hold, and the interest rate available at the discount window influence borrowing at the window. We find that banks borrow more when their reserves are ...
Working Paper
Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis
This paper discusses how a Federal Reserve issued retail central bank digital currency (CBDC) could affect U.S. monetary policy implementation. Using a stylized balance sheet analysis, we analyze the effect a retail CBDC could have on the balance sheets of the Federal Reserve, commercial banks, and U.S. households. Then we consider how these balance sheet changes could affect monetary policy implementation for the Federal Reserve. We illustrate that the potential effects on monetary policy implementation from a retail CBDC are highly dependent on the initial conditions of the Federal ...
Discussion Paper
Pre-Pledged Collateral and Likelihood of Discount Window Use
Depository institutions (DIs) periodically experience liquidity shocks, for instance due to unusually large customer payment needs or deposit withdrawals. In such cases, the DI may need to obtain funding on a short-term basis in order to bolster their liquidity position. One possible source of such funding is the Federal Reserve's discount window.
Discussion Paper
The Cleared Bilateral Repo Market and Proposed Repo Benchmark Rates
As described in a recent statement and blog post, the Federal Reserve Bank of New York (FRBNY), in cooperation with the Office of Financial Research (OFR), is considering the publication of several new benchmark rates for overnight Treasury general collateral repurchase agreement (repo) transactions in order to enhance market transparency and efficiency by improving the quality and breadth of repo market information available to the public. This note sheds light on another important segment of the overnight repo market – the segment of the bilateral repo market cleared by FICC – based on ...
Discussion Paper
Payment Stablecoins and Cross Border Payments: Benefits and Implications for Monetary Policy Implementation
In July 2025, the U.S. Congress passed the Genius Act, which established the regulatory framework for payment stablecoins. The law defines what an authorized payment stablecoin issuer is and how it will be regulated.
Discussion Paper
How Have the Fed's Three Rate Hikes Passed Through to Selected Short-term Interest Rates?
Since December 2015, the Federal Open Market Committee (FOMC) has increased the target range for the federal funds rate by 25 basis points three times, bringing the target range from 0 to 25 basis points in late 2015 to 75 to 100 basis points in March 2017. This Note examines how this cumulative 75 basis point increase in the target range for the Fed's policy rate has transmitted to other short-term interest rates.
Discussion Paper
Retail Sweep Behavior Since the Elimination of Reserve Requirements
Retail sweeps emerged in the 1990s as a way for depository institutions (DIs) to reduce the cost of satisfying federally mandated reserve requirements. Retail sweeps grew, even as the cost of satisfying reserve requirements was minimized with the beginning of interest on reserves in 2008.
Working Paper
The Effects of Liquidity Regulation on Bank Demand in Monetary Policy Operations
We estimate the effects of the liquidity coverage ratio (LCR), a liquidity requirement for banks, on the tenders that banks submit in Term Deposit Facility operations, a Federal Reserve tool created to manage the quantity of bank reserves. We identify these effects using variation in LCR requirements across banks and a change over time that allowed term deposits to count toward the LCR. Banks subject to the LCR submit tenders more often and submit larger tenders than exempt banks when term deposits qualify for the LCR. These results suggest that liquidity regulation affects bank demand in ...
Discussion Paper
The Effects of Liquidity Regulation on Participation in the Term Deposit Facility
We find that banks subject to the Liquidity Coverage Ratio (LCR) submit tenders relatively more often than banks not subject to it in operations that allow banks to withdraw funds prior to the maturity date.