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What are the functions of the Federal Reserve discount window?

  • serves as a financial stability tool by backstopping funding markets during times of widespread or idiosyncratic stresses
  • dampens large fluctuations in the federal funds rate and other short-term bank funding rates by providing standing access to liquidity at a fixed rate
  • helps depository institutions manage their liquidity to ensure credit can continue to flow to households and businesses at all times of the business cycle

What are the requirements for access to the discount window?

  • The borrower must be a Depository Institution as defined by the Federal Reserve Act.
  • Properly executed legal agreements (OC-10 agreements) and collateral are required to obtain access to the discount window.
  • Collateral can be pledged in several ways
    • the Federal Reserve’s National Book-Entry System (NBES)
    • the third-party Depository Trust Company’s (DTC’s) Custody Service 
    • on Reserve Bank premises
    • through borrower-in-Custody (BIC) arrangements, which allow depository institutions the flexibility to pledge loans held on their premises to the Reserve Bank.

Information and forms

Borrower-in-custody (BIC) program

  • Guidelines (pdf)
  • 1-4 Family Certification (doc)
  • Commercial Certification (doc)
  • Consumer Certification (doc)
  • Image and Destroy Certification (doc)
  • Electronic Note Certification (doc)
  • BIC Withdrawal Transmittal Form (doc)
  • BIC Pledge Withdrawal Transmittal Form (doc)
  • Seasonal Credit Application (xls)
  • Category Code Alignment Reference Table (xls)
  • ALD Loan Template (xls)