Helene Lee and Asani Sarkar — The Role of Central Bank Lending Facilities in Monetary Policy

Central bank lending facilities were vital during the financial crisis of 2007-08 when many banks and nonbank financial institutions turned to them to meet funding needs as private funding dried up. Since then, there has been renewed interest in the design of central bank lending facilities in the post-crisis period. In this post, we compare the Federal Reserve’s discount window with the lending facilities at three other major central banks: the Bank of England (BoE), the European Central Bank (ECB), and the Bank of Japan (BoJ). We observe that, relative to the other central banks, the Fed’s discount window is less integrated into the monetary policy framework. In a follow-up post, we will discuss differences in the central banks’ counterparty and collateral policies.

FRBNY — Liberty Street Economics
The Role of Central Bank Lending Facilities in Monetary Policy
Helene Lee, senior associate in the Federal Reserve Bank of New York’s Markets Group, and Asani Sarkar, assistant vice president in the Bank’s Research and Statistics Group