Home > Banking |
Discount Window |
The Discount Window
functions as a safety valve in relieving pressures in reserve
markets; extensions of credit can help alleviate liquidity
strains in a depository institution and in the banking system
as a whole. It also helps ensure the basic stability of the
payment system by supplying liquidity during times of systemic
stress. |
Discount Window Rates |
|
|
|
About Discount WIndow Rates |
Federal Reserve Banks have three main lending programs for depository institutions — primary credit, secondary credit and seasonal credit. Under the program enacted in 2003, Reserve Banks establish the primary credit rate at least every 14 days, subject to review and determination of the Board of Governors. |
Primary Credit Rate:
0.75% Primary credit is available to generally sound depository institutions on a very short-term basis as a backup rather than a regular source of funding. Depository institutions are not required to seek alternative sources of funds before requesting advances of primary credit. |
Secondary Credit Rate: 1.25% Secondary credit is extended on a very short-term basis to depository institutions not eligible for primary credit. It is available to meet backup liquidity needs when its use is consistent with a timely return to market sources of funding or the orderly resolution of a troubled institution. |
Seasonal Credit Rate: 0.20% |