Fed’s Barr: Discount window can be source of normal funding for banks

By Michael S. Derby

NEW YORK (Reuters) – The Federal Reserve’s point man on bank oversight, Michael Barr, said on Thursday that banks should use the central bank’s discount window whenever they need it, not just when they face funding challenges.

“We view using the discount window as a fully acceptable, normal part of any bank’s funding needs if it makes sense for them to use it from a financial perspective,” the Fed’s vice chair for supervision told a New York Fed event.

“We believe that the discount window should be used by banks when it makes sense for them to use it,” Barr said, and that usage need not signal that the firm tapping fast Fed liquidity is in trouble.