This restructuring of the Federal Reserve’s lending programs is designed to improve the functioning of the discount window; it does not represent a change in the stance of monetary policy. The primary credit program will aid in the implementation of monetary policy by making discount window credit readily available at a rate above the FOMC’s target, thus limiting how far the actual federal funds rate will rise above the target on days when funding markets are tight.		Reserve banks will minimize their administration of primary credit. By minimizing administration of and restrictions on the use of discount window credit, and by limiting extensions of credit to generally sound depository institutions, the primary credit program should reduce depository institutions' reluctance to borrow, thus making the discount window a more effective policy instrument.
		The new program offers numerous benefits for depository institutions and the Federal Reserve. Benefits & Advantages for DIs • Affords an additional and ready source of funds to meet unexpected demands or funding needs. • Enables freer access to discount window credit forsound institutions. • Offers flexible collateral arrangements. Benefits & Advantages for the Fed • Makes the Discount Window a more effective instrument in support of the Federal Reserve’s monetary policy operations. • Eliminates the subsidy inherent in the old below-market adjustment credit discount rate; enables access to discount window credit to be rationed primarily by the lending rate. • Provides a means to lower the primary credit rate quickly in a financial emergency.