The primary credit program marks a fundamental shift - from administration to pricing - in the Federal Reserve's approach to discount window lending. Notably, eligible depository institutions may obtain short-term primary credit without exhausting or even seeking funds from alternative sources. Minimal administration of and restrictions on the use of primary credit will make it a more reliable backup funding source than was adjustment credit. Being prepared to borrow primary credit — like access to any other backup liquidity facility — enhances an institution's liquidity.

For examiners, the Federal Reserve's new primary credit program requires a shift in thinking about the role the discount window can play in depository institutions' liquidity management and contingency funding arrangements. The primary credit program may play a larger role in generally sound institutions' plans than did adjustment credit. Bank examiners should view occasional use of primary credit as appropriate and unexceptional.