Discount Window

When the Federal Reserve System was established in 1913, lending reserve funds through the discount window was intended as the principal instrument of central banking operations. Although the window was long ago superseded by open market operations as the most important tool of monetary policy, it still has a complementary role in the day-to-day implementation of policy.

The Discount window functions as a safety valve in relieving pressures in reserve markets; in circumstances where extensions of credit can help relieve liquidity strains in the banking system, the window also helps to assure the basic stability of financial markets more generally.

The Discount Window function is able to assist customers in establishing borrowing relationships, ensuring that appropriate collateral is in place, and extending credit. The Discount Window is administered in accordance with the Federal Reserve Act, Regulation A, and Operating Circular 10 - Lending.

The Federal Reserve System Discount Window site provides the following:

• General information on the Discount Window, including an introduction to the Discount Window, Mechanics of Borrowing, and a summary of Federal Reserve - Operating Circular 10: Lending;
• Official guidelines including Regulation A of the Federal Reserve Board of Governors and pdf versions of:
  • Operating Circular 10 (Lending);
  • Operating Circular 8 (Collateral);
  • Operating Circular 1 (Account Relationships);
  • Relevant Provisions from the Federal Reserve Act;
• Lending agreements, documents and instructions for establishing access to the Discount Window;
• Primary credit, Seasonal credit, and Secondary Credit rate information and historical tables;
• Resources to help your institution establish collateral arrangements;
• District contacts and specific information on local topics.
  

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