Federal Reserve research shows that depository institutions (DIs) are more likely to borrow from the discount window after a sudden drop in reserve balances if they have pre‑pledged collateral. Using daily data from 2015 to mid‑2025, the study examined about 80,000 liquidity‑shock events, during which only 4 % involved discount‑window borrowing. Probit analysis found that having loan collateral pre‑pledged raised borrowing probability by 4.7 % and securities collateral by 5.3 %. The effect was stronger for institutions that were Federal Home Loan Bank members, for the period after COVID‑19, and when reserve‑to‑asset ratios were below the median—raising the likelihood by up to 10.5 %. Larger DIs, however, were less likely to use the window.
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https://www.federalreserve.gov/econres/notes/feds-notes/pre-pledged-collateral-and-likelihood-of-discount-window-use-20250829.html
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