Is the discount window obsolete? - discount window coverings
Given the reluctance of banks to borrow / reserve the Fed, even if they could for the loan will be encouraged to why the U.S. central bank for loans to banks should continue to offer? What rammifications Fed would not be close to the discount window?
Thursday, January 21, 2010
Discount Window Coverings Is The Discount Window Obsolete?
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2 comments:
Thus, the stigma that kept using that banks exist to use in the past. I think that's why the Fed wanted to create rather than to this new fund in TAF auction. This age have a stigma, and you can control exactly how much money they want to communicate. He said someone in the press conference that the Fed announced the plan showed that this system works could become permanent ... in essence, instead of the discount window, though not formally repealed.
I would say it is not so outdated as it should. With the lifting of the stigma in those days the banks are more likely to use. The fact that the use it makes me feel uncomfortable because it suggests an inefficient use of your page. And the Fed is a platform for auctions, such as government bonds, which bothers me even more, as it has now become, is the scar even more depressed.
Impact of the closure of this window is likely to result in greater turbulence of the bank at the beginning, but I think that the system needs to remove itself. The correction is likely that banks keep with higher operating margins, and strictly with the capital issues. This will have a negative impact on the economy, but no negative impact (I) can not be so bad. I mean, at what point is the aggressive growth is a disadvantage of the market? "
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