Discount window
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Discount window refers to the practice by a central bank of extending short-term loans secured by government bonds to financial institutions. The interest rate charged on such loans—or discount rate, an important factor in the control of money supply—is set as a matter of monetary policy. When a bank is in need of money, it can turn to the Federal Reserve for a loan, the interest that the Fed charges the bank is called the discount rate. When banks other than the Federal Reserve loan other banks money, the interest rate charged is known as the Federal Funds Rate, and is typically approximately a percentage point below the Discount Rate.
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