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

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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
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1637&context=journal-of-financial-crises
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    Keywords

    banking; central banking; crisis management; financial institutions; financial stability; liquidity; LOLR;
    All these keywords.

    JEL classification:

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

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