IDEAS home Printed from https://ideas.repec.org/a/ysm/ypfsfc/v7y2025i1p690-706.html
   My bibliography  Save this article

Eliminating Discount Window Stigma: What Can We Learn from Abroad?

Author

Listed:

Abstract

This article picks up from an earlier Journal of Financial Crisis policy note on discount window design to see how the experiences of other central banks can inform work to redesign the discount window to reduce stigma. As explained in that article, banks' reluctance to use the discount window is problematic for financial stability as it constrains the Fed's ability to use its liquidity provision tools to stem runs and mitigate contagion in times of stress. The stigma associated with discount window borrowing in the United States is well documented and is a multifaceted phenomenon.

Suggested Citation

  • McLaughlin, Susan, 2025. "Eliminating Discount Window Stigma: What Can We Learn from Abroad?," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 7(1), pages 690-706, April.
    • Handle: RePEc:ysm:ypfsfc:v:7:y:2025:i:1:p:690-706
    as

    Download full text from publisher

    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1637&context=journal-of-financial-crises
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kelly, Steven, 2024. "Policy Note | Weekly Fed Report Still Drives Discount Window Stigma," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 6(3), pages 597-610, March.
    2. Helene Lee & Asani Sarkar, 2016. "Is There Discount Window Stigma in the United Kingdom?," Liberty Street Economics 20160912, Federal Reserve Bank of New York.
    3. Brian Madigan & William R. Nelson, 2002. "Proposed Revision to the Federal Reserve's Discount Window Lending Programs," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 88(7), pages .313-319, July.
    4. Craig H. Furfine, 2004. "Standing facilities and interbank borrowing: evidence from the Federal Reserve’s new discount window," Working Paper Series WP-04-01, Federal Reserve Bank of Chicago.
    5. Kelly, Steven & McLaughlin, Susan & Metrick, Andrew, 2024. "FHLB Dividends: Low-Hanging Fruit for Reconfiguring FHLB Lending," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 6(2), pages 85-104, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McLaughlin, Susan, 2024. "Policy Note | Discount Window Stigma: What's Design Got to Do with It?," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 6(3), pages 587-596, March.
    2. Link, Thomas & Neyer, Ulrike, 2016. "Transaction Cost Heterogeneity in the Interbank Market and Monetary Policy Implementation under alternative Interest Corridor Systems," VfS Annual Conference 2016 (Augsburg): Demographic Change 145853, Verein für Socialpolitik / German Economic Association.
    3. Klee, Elizabeth, 2010. "Operational outages and aggregate uncertainty in the federal funds market," Journal of Banking & Finance, Elsevier, vol. 34(10), pages 2386-2402, October.
    4. Adam Ashcraft & Morten L. Bech & W. Scott Frame, 2010. "The Federal Home Loan Bank System: The Lender of Next‐to‐Last Resort?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(4), pages 551-583, June.
    5. Helwege, Jean & Boyson, Nicole M. & Jindra, Jan, 2017. "Reprint of: Thawing frozen capital markets and backdoor bailouts: Evidence from the Fed's liquidity programs," Journal of Banking & Finance, Elsevier, vol. 83(C), pages 193-220.
    6. Mark A. Carlson & Rebecca Zarutskie, 2022. "Considerations regarding the use of the discount window to support economic activity through a funding for lending program," Finance and Economics Discussion Series 2022-070, Board of Governors of the Federal Reserve System (U.S.).
    7. William C. Whitesell, 2006. "Monetary policy implementation without averaging or rate corridors," Finance and Economics Discussion Series 2006-22, Board of Governors of the Federal Reserve System (U.S.).
    8. Helwege, Jean & Boyson, Nicole M. & Jindra, Jan, 2017. "Thawing frozen capital markets and backdoor bailouts: Evidence from the Fed's liquidity programs," Journal of Banking & Finance, Elsevier, vol. 76(C), pages 92-119.
    9. Huberto M. Ennis, 2019. "Interventions in Markets with Adverse Selection: Implications for Discount Window Stigma," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(7), pages 1737-1764, October.
    10. ANTOINE MARTIN & JAMES McANDREWS, 2010. "Should There Be Intraday Money Markets?," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 110-122, January.
    11. Milton H. Marquis, 2002. "Setting the interest rate," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct11.
    12. James T.E. Chapman & Antoine Martin, 2013. "Rediscounting under Aggregate Risk with Moral Hazard," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(4), pages 651-674, June.
    13. Craig H. Furfine, 2004. "Standing facilities and interbank borrowing: evidence from the Federal Reserve’s new discount window," Working Paper Series WP-04-01, Federal Reserve Bank of Chicago.
    14. Jung, Alexander, 2016. "Have minutes helped to predict fed funds rate changes?," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 18-32.
    15. Bordo, Michael D. & Haubrich, Joseph G., 2024. "Low interest rates and the predictive content of the yield curve," The North American Journal of Economics and Finance, Elsevier, vol. 71(C).
    16. John Kandrac, 2021. "Can the Federal Reserve Effectively Target Main Street? Evidence from the 1970s Recession," Finance and Economics Discussion Series 2021-061, Board of Governors of the Federal Reserve System (U.S.).
    17. Patricia S. Pollard, 2003. "A look inside two central banks: the European Central Bank and the Federal Reserve," Review, Federal Reserve Bank of St. Louis, vol. 85(Jan), pages 11-30.
    18. Bucher, Monika & Hauck, Achim & Neyer, Ulrike, 2014. "Frictions in the interbank market and uncertain liquidity needs: Implications for monetary policy implementation," DICE Discussion Papers 134, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    19. Craig Furfine, 2003. "Standing Facilities and Interbank Borrowing: Evidence from the Federal Reserve's New Discount Window," International Finance, Wiley Blackwell, vol. 6(3), pages 329-347, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    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:ysm:ypfsfc:v:7:y:2025:i:1:p:690-706. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/smyalus.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.