# Discount Window The **discount window** is the [[Federal Reserve]]'s direct lending facility for depository institutions — the original lender-of-last-resort function written into the [[Federal Reserve Act]] in 1913. Its main tier, **primary credit**, is available to sound banks against a broad range of collateral at a rate set by the Reserve Bank boards and approved by the Board of Governors. Secondary and seasonal credit serve weaker and smaller institutions respectively. Its defining problem is **stigma**. Because discount window borrowing was historically read as a sign of distress, banks avoid it precisely when they most need it — a dynamic visible in March 2023, when institutions under strain turned to Federal Home Loan Bank advances rather than the window. Congress worsened this in 2006 by requiring disclosure of borrower identities on a two-year lag. Regulators have since pressed banks to pre-position collateral and test their access, with limited success. As of July 30, 2026 the primary credit rate is **3.75 percent**, matching the [[Standing Repo Facility]] at the top of the target range. ## See also - [[Monetary Policy Transmission Flow]] - [[Standing Repo Facility]] · [[The Banking System]] · [[Federal Reserve]]