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Discount window loans

• These are the loans Federal Reserve makes to the banks. The interest cost is below the Fed funds rate. Maybe used during temporary liquidity crunches as emergency borrowing. Fed may clamp down on excessive usage. Arbitraging the fed funds rate can potentially cost the bank its charter.

 
 

Follow this link for all the terms related to loan.

 
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 Fed funds
Fed
Interest
Its
Liquidity
Reserve
 
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