Discount Window
The Fed's lending facility where banks can borrow short-term cash against collateral when they need liquidity.
In plain English
The Fed's lending facility where banks can borrow short-term cash against collateral when they need liquidity.
The discount window is the Fed's emergency backstop for banks. Banks pledge collateral and borrow at the discount rate.
Banks have historically been reluctant to use it, fearing it signals trouble. In crises like 2008 and 2023, borrowing surged as banks scrambled for cash.
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