Fed’s Bowman Wants Closer Look at Banks’ Discount-Window Use
- Broader framework to aid liquidity should be weighed: Bowman
- Central bank’s discount window seldom used except in crises
Michelle Bowman
Photographer: Al Drago/BloombergThis article is for subscribers only.
Federal Reserve Governor Michelle Bowman says the central bank should weigh whether discount-window borrowing capacity should be recognized in reviews of lenders’ liquidity resources.
“We should explore ways to validate the use of discount window lending in our regulatory framework,” Bowman said in a speech Wednesday in Washington. “While the federal banking agencies have encouraged institutions to be prepared to access discount window loans, we should also seriously consider whether we should finally recognize discount window borrowing capacity in our assessment of a firm’s liquidity resources, including in meeting a firm’s obligations under the Liquidity Coverage Ratio.”