Fed Governor’s Remarks on Discount Window

(Reuters) – Federal Reserve Governor Michelle Bowman on Thursday stated that banks should use the Fed’s discount window primarily for emergencies rather than typical liquidity needs. This perspective contrasts with recent advocacy from banking regulators encouraging more frequent access to the facility.

Bowman addressed the Mid-size Bank Coalition of America Board of Directors Workshop, highlighting the potential downsides of discount window borrowing. She acknowledged that while banks should consider signing up and possibly testing the system, requiring them to post collateral might lead to “unintended consequences” given their other asset needs.