[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-321491-105":59,"doc-detail-321491-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","economic-commentary-understanding-the-borrowing-relationship","Economic Commentary - Understanding the Borrowing Relationship","","Economic Commentary explains how the Federal Reserve discount window supplies loans to depository institutions across districts. It describes adjustment, seasonal, and extended credit programs, the regulatory guidance under Regulation A and the Federal Reserve Act, and the requirements that banks seek alternative funding first. The analysis focuses on how discount-window borrowing interacts with the spread between the federal funds rate and the discount rate, and reviews theoretical explanations for observed borrowing behavior.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/economic-commentary-understanding-the-borrowing-relationship/321491/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/economic-commentary-understanding-the-borrowing-relationship/321491.png","ImageObject",300,407,{"name":92,"@type":93},"Theodore","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-02","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",11,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What is the discount window and what does it do?","Question",{"text":113,"@type":114},"It provides loans to depository institutions in each Federal Reserve district, supporting liquidity, portfolio adjustments, and emergency funding when other credit sources are unavailable.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What are the three categories of Federal Reserve discount-window loans?",{"text":118,"@type":114},"They include adjustment credit, seasonal credit loans, and the extended credit program for longer-term needs tied to prolonged cash flow problems.",{"name":120,"@type":111,"acceptedAnswer":121},"How is borrowing related to the spread between the federal funds rate and the discount rate?",{"text":122,"@type":114},"Borrowing tends to be associated with wider or narrower spreads, and the commentary states this positive relationship is consistent with economic theory and the observed discount-window behavior.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321491,1790452298,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},7971461740886,"https://ap-avatar.wpscdn.com/davatar_3d24733baf745e90a7e4bdd5f77d97b2","ECONOMICCOMMENTARY  \nOne of the functions of the FederalReserve System is to provide loans todepository institutions(generally,banks)in each district through what is figura-tively known as the “discount window.”  \nThese loans help banks to overcometemporary liquidity problems,to adjusttheir investment portfolios to suddenchanges,and to handle emergency sit-uations when other sources of creditare unavailable.  \nThe discount window also plays animportant role,however,as a monetarypolicy instrument.In this capacity,mon-etary policymakers rely on a system-atic relationship observed between thevolume of borrowing at the discountwindow and the difference(spread)between the federal funds rate and thediscount rate.The federal funds rateis the rate charged for loans in the inter-bank market for bank reserves,whilethe discount rate is the rate charged forborrowing reserves at Federal ReserveBanks.In general,greater or lesseramounts of borrowing tend to be asso-ciated with wider or narrower spreadsbetween the federal funds rate andthe discount rate.  \nIn this Economic Commentary,weexplore how borrowing and the spreadinteract,review the monetary policyrole of this relationship,and discusssome changes in this relationship thathave taken place in recent years.  \nThe Anatomy of BorrowingFedera Reserve loans fall into three cat-egories.Loans that allow depositories  \nRichard L.Mugel is an economic analyst at theFederal Reserve Bank of Cleveland.  \nThe views expressed herein are those of the authorand not necessarily those of the Federal ReserveBank of Cleveland or of the Board of Governors ofthe Federal Reserve System.  \n\n| Table 1 Discount Window Administration Numerical Guidelines   |\n| --- |\n| Borrowing a  \u003Cbr>Consecutive  \u003Cbr>a percent of  \u003Cbr>Weeks of borrowing within:  \u003Cbr>Size of bank  \u003Cbr>weeks  \u003Cbr>domestic  \u003Cbr>26 weeks  \u003Cbr>13 weeks  \u003Cbr>deposits  \u003Cbr>(domestic deposits)  \u003Cbr>borrowing   |\n| 2.0  \u003Cbr>7-8  \u003Cbr>6-7  \u003Cbr>4-5  \u003Cbr>Under $200 million  \u003Cbr>2.0  \u003Cbr>3-4  \u003Cbr>$200 million-$1 billion  \u003Cbr>7-8  \u003Cbr>5-6  \u003Cbr>1.5  \u003Cbr>6-7  \u003Cbr>4-5  \u003Cbr>2-3  \u003Cbr>$1 billion-$3 billion  \u003Cbr>1.0  \u003Cbr>1-2  \u003Cbr>More than $3 billion  \u003Cbr>4-5  \u003Cbr>3-4   |\n| SOURCE:Board of Governors of the Federal Reserve System.   |\n\nto adjust their portfolios to unanticipateddeposit and loan activity are called ad-justment credit.Seasonal credit loansallow certain institutions(farm banks,for example),special access to the win-dow to fund seasonal activities,suchas planting and harvesting.This creditprogram exists for those institutionsthat do not have ready access to alterna-tive funding in the national moneymarkets.The extended credit program isdesigned to fulfull longer-term needsresulting from prolonged cash flow prob-lems of depository institutions!  \nLoans are granted at each of the 12Federal Reserve district banks.Whileloans are approved at the discretion ofeach bank,the extension of discount-window credit is not arbitrary.Borrow-ing is guided by Federal Reserve Regu-lation A,issued under the authority ofthe Federal Reserve Act,as amendedby the Monetary Control Act of 1980.  \nAccording to the guidelines,banksmust have an appropriate reason forborrowing and must have sought alter-native sources of funding first.Appro-priate reasons for borrowing include  \n(1)liquidity needs arising from unantic-ipated deposit or loan activity,(2)the  \n1.Because of the special circumstances underwhich it is typically issued,the volume of extendedcredit borrowing tends to be relatively insensi-tive to changes in short-term interest rates andis,therefore,excluded from most expressions ofthe borrowing function.  \navoidance of overdrafts in reserve ac-counts and,(3)liquidity needs arisingfrom outside forces,such as wire trans-fer failures.  \nInappropriate reasons include bor-rowing to take advantage of a favorablespread between the discount rate andrates on other sources of funds,or forsupporting loan and investment activ-ity?In addition,the Federal Reservesets guidelines pertaining","cbCair8XBvARYaK9","https://ap.wps.com/l/cbCair8XBvARYaK9","pdf",1504530,"English","# Understanding the Borrowing Relationship\n## The Anatomy of Borrowing\n## Discount-Window Guidelines and Regulatory Framework\n## Two Theories of Discount-Window Behavior","[{\"question\":\"What is the discount window and what does it do?\",\"answer\":\"It provides loans to depository institutions in each Federal Reserve district, supporting liquidity, portfolio adjustments, and emergency funding when other credit sources are unavailable.\"},{\"question\":\"What are the three categories of Federal Reserve discount-window loans?\",\"answer\":\"They include adjustment credit, seasonal credit loans, and the extended credit program for longer-term needs tied to prolonged cash flow problems.\"},{\"question\":\"How is borrowing related to the spread between the federal funds rate and the discount rate?\",\"answer\":\"Borrowing tends to be associated with wider or narrower spreads, and the commentary states this positive relationship is consistent with economic theory and the observed discount-window behavior.\"}]","Economic Commentary - Understanding the Borrowing Relationship | PDF",1789959461,13]