Federal Reserve Speeches·Sep 22, 2026, 10:20 AM ET

Jefferson, Discount Window Modernization and Treasury Market Functioning

The Federal Reserve's discount window, established 113 years ago, is undergoing modernization to ensure efficient & accessible liquidity for banks via primary credit borrowing.
Modernization efforts focus on three dimensions: business process improvements, automation enhancements, & coordination with Federal Home Loan Banks (FHLBs).
Business process changes include standardized collateral frameworks, electronic signatures, simplified forms, & new rules allowing banks to pledge multiple loan types while retaining possession.
Automation is highlighted by the 2024 launch of Discount Window Direct (DWD), a self-service portal now used for over 60% of loan requests to enable faster, direct communication.
Collaboration with FHLBs aims to enhance interoperability & reduce the time required to re-allocate collateral between the two systems.
Treasury securities serve as critical collateral for discount window loans, helping banks avoid forced sales during market stress & supporting overall Treasury market resilience.
The ability to pledge Treasury securities from Fedwire accounts for same-day loans proved vital during the March 2020 crisis & helps alleviate money market pressures.
Continued modernization reduces operational frictions, encourages healthy banks to use the window without hesitation, & strengthens the broader financial system.