Federal Reserve Says US Banks Should Use ‘Discount Window’ to Minimise Cash Crunch

WASHINGTON (Sputnik) – The Federal Reserve said in a statement on Monday that banks in the United States should use the so-called “discount window” to minimize a cash crunch for households and businesses amid fears that the novel coronavirus (COVID-19) crisis could trigger a recession.

The discount window is a monetary policy instrument that allows eligible institutions to borrow money from the Federal Reserve, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.

The Federal Reserve said that providing ready access to funding helps depository institutions manage liquidity risks efficiently and avoid actions that could have negative consequences for their customers.

The Federal Reserve’s statement came as stocks on Wall Street tumbled about 11 percent in Monday’s early trade on fears of a recession despite the central bank executing on Sunday an emergency rate cut – its second in two weeks – of one point and allocating $700 million for bond-buying to support financial markets.

Sourse: sputniknews.com