What is the Federal Reserve’s discount window?

Key takeaways

• The Discount Window is a program where banks and other depository institutions can borrow money from the Fed to meet everyday or temporary funding needs.
• Some banks and other depository institutions use the Discount Window everyday for routine funding needs, or as a backup when other lenders aren’t available.
• The Discount Window ensures these institutions have access to credit no matter what is happening in the economy.

Video summary

A subject-matter expert explains how the Federal Reserve provides credit to banks and other depository institutions through a program known as the Discount Window.

Full transcript

Ever wondered how the Fed provides credit to banks and other depository institutions? The answer is: the Federal Reserve’s discount window.

So, what exactly is the discount window?

A facility where banks and other depository institutions can borrow money from the Fed to meet everyday or temporary funding needs. 

Some institutions use it everyday for routine funding needs, or as a backup when other lenders aren’t available.

Over the past few years, many banks and other depository institutions have signed up for the discount window to ensure they have access to credit no matter what is happening in the economy.

From meeting ordinary financial needs, to ensuring customers have access to their money even during bank runs or recessions, the discount window does both.

The Federal Reserve encourages eligible depository institutions to contact their local Reserve Bank to learn more about the discount window and its role in supporting financial stability.

Click the link in our bio to learn more about the discount window.