Search Results
Newsletter
Open for Business: Understanding the Fed's Discount Window
Explore what the discount window is, how depository institutions access it, and how it helps the Federal Reserve conduct monetary policy.
Journal Article
How Do Banks Use the Discount Window?
Highlighted research of "The Fed's Discount Window: An Overview of Recent Data." Felix P. Ackon and Huberto M. Ennis. Federal Reserve Bank of Richmond Economic Quarterly, First-Fourth Quarter 2017, vol. 103, nos. 1-4, pp. 37-79.
Discussion Paper
The Recent Rise in Discount Window Borrowing
The Federal Reserve’s primary credit program—offered through its “discount window” (DW)—provides temporary short-term funding to fundamentally sound banks. Historically, loan activity has been low during normal times due to a variety of factors, including the DW’s status as a back-up source of liquidity with a relatively punitive interest rate, the stigma attached to DW borrowing from the central bank, and, since 2008, elevated levels of reserves in the banking system. However, beginning in 2022, DW borrowing under the primary credit program increased notably in comparison to past ...
Working Paper
Mark Carlson’s The Young Fed: A Review Essay
Anticipatory discount window stigma
Observers often assert that stigma—a perception that depositors, investors or others will penalize an institution for borrowing from the discount window—keeps banks from borrowing when they should, making the facilities less effective. Dallas Fed Senior Vice President Sam Schulhofer-Wohl argues that some harms of discount window stigma can be mitigated regardless of whether stigma itself persists.
The Speed of Discount Window Lending: A Look Back at 1985
The 1985 thrift crises in Ohio and Maryland show how the Fed, as a lender of last resort, took proactive steps to enhance the effectiveness of its discount window.
Speech
Discussion of “Evaluating Monetary Policy Operational Frameworks” by Ulrich Bindseil: remarks at the 2016 Economic Policy Symposium at Jackson Hole, Wyoming
Remarks at the 2016 Economic Policy Symposium at Jackson Hole, Wyoming.
Working Paper
The Fed's Discount Window: An Overview of Recent Data
From July 2010 until June 2015, the Federal Reserve made over 16,000 loans to financial institutions through the discount window. Recent regulations mandate the release of detailed information about individual loans two years after their occurrence. We study the newly available loan data and uncover the main patterns that broadly describe activity at the Fed?s discount window in recent years.
Discussion Paper
Why Did U.S. Branches of Foreign Banks Borrow at the Discount Window during the Crisis?
To help contain the economic damage caused by the recent financial crisis, the Federal Reserve extended large amounts of liquidity to financial firms through traditional lending facilities such as the discount window as well as through newly designed facilities. Recently released Federal Reserve data on discount window borrowing show that some U.S. branches and agencies of foreign banks were among the most active users of the window. In this post, we explain why U.S. branches borrow at the discount window. We also discuss two main reasons why these branches had a large need for dollars during ...
Briefing
Understanding Discount Window Stigma
The discount window is a tool that the Federal Reserve has long used to increase the stability of the financial system, but some believe its effectiveness is diminished by stigma: institutions may avoid borrowing from it out of concern that they may be perceived as being in weakened financial condition. Recent Richmond Fed research has shed new light on the functioning of the discount window and the role that stigma may play in achieving desirable outcomes.