✉news BusinessBanking first seen 5 h ago, last 1 h ago, peak #13
Banks Urged to Back Discount Window Capacity with Loans, Not Treasuries
Original: Replacing Reserve Balances: Loans, Not Treasuries, Should Back Banks’ Discount Window Capacity
The Bank Policy Institute is arguing that when banks pre-position collateral to secure access to the Federal Reserve's discount window, they should pledge loans rather than Treasuries. The group says this would let banks free up Treasury holdings while still maintaining precautionary liquidity capacity, a debate that has grown since the 2023 regional banking stress exposed how few banks were prepared to borrow from the Fed.
Why now: Policymakers and banks are still reassessing discount window readiness after recent banking stress and the Fed's push for broader pre-pledging of collateral.
Bank Policy InstituteFederal Reserve
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- Replacing Reserve Balances: Loans, Not Treasuries, Should Back Banks’ Discount Window Capacity · Bank Policy Institute
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