- Events of March 2023 have really impacted how we need to think about liquidity risk.
- Critically important that banks have a broad set of funding arrangements, one of them has to be the Fed discount window
- We want to see every bank signed up to discount window.
- We want to see every bank testing the discount window on a regular basis.
- Safe healthy banks use the discount window all the time. That's a good thing.
- Once banks are signed up, discount window is an easy system to use.
The regional banking crisis of 2023 potentially could have been avoided through the use of the discount window. The discount window is used as a lender of last resort and provides banks with liquidity in times of shortfalls.
