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Removing discount window stigma is difficult – NY Fed
Authors recommend creating a new facility and mandating regular usage
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Removing the stigma attached to the Federal Reserve’s discount window is challenging, say researchers with the Federal Reserve Bank of New York.
Olivier Armantier and Charles Holt suggest that new permanent backstop facilities be created and policy-makers mandate that banks use those facilities regularly. New facilities do not suffer from the “inertia” that entrenches stigma, and by mandating regular usage, stigma would not be created, the authors argue.
The discount window is a backstop facility
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