discount window

Discount Window

The location at the Federal Reserve where financial institutions go to borrow money at the discount rate.

Notes:

The discount window functions as a safety valve for relieving pressures in reserve markets. It helps to reduce liquidity problems for banks and assists in assuring the basic stability of financial markets.

Banks are discouraged from using this type of borrowing.

See also: Discount Rate, Federal Funds Rate, Federal Reserve Bank, Federal Reserve System, Federal Reserve Open Market Committee (FOMC), Federal Reserve Board (FRB), Interest Rate

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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.

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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.