The Federal Reserve Bank of San Francisco Discount Window extends credit to depository institutions. It acts as a safety valve to relieve pressure in reserve markets, helping to alleviate temporary liquidity strains at the individual depository institution level. During times of systemic stress, the Discount Window also helps ensure basic stability of the payments system by supplying liquidity to the banking sector more generally. Liquidity is provided via collateralized, short-term loans to depository institutions through the Primary Credit lending program. Other lending programs include Secondary Credit and Seasonal Credit.
About the Discount Rate
The primary credit rate, also known as the discount rate, is the rate the Reserve Bank charges depository institutions to borrow. Each Reserve Bank’s board of directors establishes the rate, subject to the review and determination of the Board of Governors of the Federal Reserve System. See current and previous discount rates.
Types of Discount Window Credit
Primary credit is available to generally sound depository institutions on a very short-term basis, typically overnight, at a rate above the Federal Open Market Committee’s (FOMC) target rate for federal funds.
Secondary credit is available to depository institutions that are not eligible for primary credit. It is extended on a very short-term basis, typically overnight, at a rate that is above the primary credit rate.
Seasonal credit is available to small depository institutions (typically whose total deposits are under $500 million) to help manage significant seasonal swings in their loans and deposits. Under the seasonal credit program, qualified depository institutions may obtain credit lines for periods of up to nine months in order to meet their seasonal funding needs. Seasonal credit is available only to depository institutions that can demonstrate a clear pattern of recurring intra-yearly swings in funding needs. The interest rate applied to seasonal credit is a floating rate based on market rates.
Borrowing From the Discount Window
In order to borrow from the Discount Window, an institution must have on file the necessary authorizing resolutions as well as an adequate amount of pre-approved eligible collateral. For general information on the Federal Reserve’s credit and liquidity programs, please reference the Board of Governors’ Credit and Liquidity Programs and the Balance Sheet.
Collateral Pledging and Inspections
Loan collateral is generally pledged through the Borrower-in-Custody of collateral (BIC) program, subject to periodic inspections. The BIC program allows the pledge of collateral in the form of loans held in custody of the depository institutions. This can be used as collateral to secure advances for the Discount Window, Payment System Risk (PSR), or the Treasury Tax and Loan (TT&L) program. In addition, collateral may be pledged under the BIC program for the seasonal credit program.
The Credit Risk Management (CRM) department at the Federal Reserve Bank of San Francisco administers daylight and overnight credit to depository institutions in the Twelfth District through its Discount Window, collateral, condition monitoring, and payment system risk functions.
Credit Risk Management
Federal Reserve Bank of San Francisco
101 Market Street, MS 830
San Francisco, CA 94105
CRM Phone (866) 974-7475
Discount Window Office Hours
Monday – Friday
8:00 A.M. – 4:00 P.M. Pacific Time