At its core, a discount rate is the interest rate charged to commercial banks on loans they receive from the Federal Reserve Bank's lending facility, also known as, the discount window. To a run of the mill John or Jane Doe, this seems like a foreign language altogether. Throughout this essay, the structure, function, and operation of the Federal Reserve’s discount rate will be investigated.
First, the Federal Reserve institutions offer three discount window programs to banks: primary credit, secondary credit, and seasonal credit. These three branches outline the skeleton of discount rates. Primary credit is the loans that are given for a brief period of time to depository institutions or commercial banks that are in sound financial condition,
First, the Federal Reserve institutions offer three discount window programs to banks: primary credit, secondary credit, and seasonal credit. These three branches outline the skeleton of discount rates. Primary credit is the loans that are given for a brief period of time to depository institutions or commercial banks that are in sound financial condition,