discount window

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Discount window

Facility provided by the Fed enabling member banks to borrow reserves against collateral in the form of government securities or other acceptable paper.

Discount Window

An agency from which member banks of the Federal Reserve can borrow funds. Banks borrow short-term funds at the discount rate from the discount window, and must provide collateral for the transaction. The idea behind the discount window is to provide liquidity to banks when they need it without making them too reliant upon it. The Federal Reserve accomplishes this by raising or lowering the discount rate: a low interest rate indicates that it is trying to promote growth by making liquidity easily available, and a high interest rate shows that the Fed is concerned about inflationary pressures on the economy and trying to reduce the amount of money in the economy. While the discount window provides services electronically now, the term comes from an actual bank where representatives of member banks used to go to borrow money from the Federal Reserve.

discount window

The lending facility of the Federal Reserve through which commercial banks borrow reserves. Federal Reserve policy toward supplying banks with reserves has a major effect on credit conditions and interest rates.
References in periodicals archive ?
The Discount Window, Open Market Operations, and the Coordinator of Last Resort
The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window.
Summary: MANAMA -- Central Bank of the UAE said on Wednesday that preparations to introduce a discount window were proceeding, though it declined to specify when the facility would be ready.
Recently the Central Bank of the United Arab Emirates (CBUAE) announced that it would create a new discount window called the marginal lending facility (MLF).
The UAE Central Bank said on Monday it's aiming to make changes to its monetary policy framework by installing a discount window to enable banks to borrow intra-day and overnight funds from the central bank.
The original requirement under the Dodd-Frank act required banks with access to deposit insurance and the Federal Reserve's discount window to move some derivatives trades to separate affiliates.
During the height of the financial crisis, banks around the world lined up to borrow money from the discount window of the Federal Reserve.
The first is traditional The Fed supplies liquidity by providing credit through open market operations and by lending to depository institutions at the so-called discount window.
The new discount window announced will be available to banks at 30-day terms and is effectively a permanent version of the Special Liquidity Scheme introduced in April to help banks deal with a liquidity crisis.
Federal Reserve said in a separate statement that the companies could access the central bank's discount window for emergency cash.
Told commercial banks they can borrow at the discount window without getting a black mark next to their name.
The Federal Reserve took more emergency measures to stem the fast-spreading financial crisis, cutting its discount rate on Sunday and opening up discount window lending to major investment banks, a tool not used since the Great Depression.