12-09-2008, 01:50 AM
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#14 (permalink)
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| Kanchanaburi
Last Online: 16-03-2010 11:08 PM Join Date: Aug 2008
Posts: 189
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Originally Posted by Butterfly  Quote: |
Originally Posted by who The 'discount window' has nothing to due with "rescue" it is used in the day to day operation of the US banking system. | I think you are confusing the Fed Funds rate and the discount window, Quote: |
Originally Posted by Wiki This rate is generally set at a rate close to 100 points above the target federal funds rate. The idea is to encourage banks to seek alternative funding before using the "discount rate" option | The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.
It is distinct from the federal funds rate or its equivalents in other currencies, which determine the rate at which banks lend money to each other. In recent years, the discount rate has been approximately a percentage point above the federal funds rate (see Lombard credit). Because of this, it is a relatively unimportant factor in the control of the money supply and is only taken advantage of at large volume during emergencies. Discount window - Wikipedia, the free encyclopedia | The discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the central bank to meet temporary shortages of liquidity. The interest rate charged on such loans by a central bank is called the discount rate. |
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