IDEAS home Printed from https://ideas.repec.org/a/fip/fedreb/00028.html
   My bibliography  Save this article

Discount Window Lending: Policy Trade-offs and the 1985 BoNY Computer Failure

Author

Abstract

On November 21, 1985, the Bank of New York (BoNY) suffered a software failure that left it unable to redeliver securities it had received from other institutions as an intermediary. The result of the failure was that the bank sought and received $22.6 billion in discount window lending from the New York Fed, a record-setting amount. The episode presents a case study for considering when discount window lending and similar interventions are justified as a matter of efficiency, as well as the need for policymakers to take account of possible moral hazard that may lead to inadequate safeguards against failures ? whether operational breakdowns or deficient financial strategies.

Suggested Citation

  • Huberto M. Ennis & David A. Price, 2015. "Discount Window Lending: Policy Trade-offs and the 1985 BoNY Computer Failure," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue May.
    • Handle: RePEc:fip:fedreb:00028
    as

    Download full text from publisher

    File URL: https://fraser.stlouisfed.org/files/docs/historical/frbrich/econbrief/frbrich_eb_15-05.pdf?utm_source=direct_download
    File Function: Full Text
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huberto M. Ennis, 2016. "Models of Discount Window Lending: A Review," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 1-50.
    2. Office of Financial Research (ed.), 2016. "2016 Financial Stability Report," Reports, Office of Financial Research, US Department of the Treasury, number 16-3.
    3. Huberto M. Ennis & Elizabeth C. Klee, 2021. "The Fed's Discount Window in "Normal" Times," Working Paper 21-01, Federal Reserve Bank of Richmond.
    4. Jackson Evert & Arantxa Jarque & John R. Walter, 2018. "On the Measurement of Large Financial Firm Resolvability," Working Paper 18-6, Federal Reserve Bank of Richmond.
    5. Office of Financial Research (ed.), 2017. "2017 Financial Stability Report," Reports, Office of Financial Research, US Department of the Treasury, number 17-2.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedreb:00028. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Pascasio (email available below). General contact details of provider: https://edirc.repec.org/data/frbrius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.