Other U.S. agencies join Fed in pushing banks to use discount window

WASHINGTON (Reuters) - The U.S. Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency said on Monday they encourage depositary institutions to use the discount window to meet demands for credit.

“By providing ready access to a backup source of funding, the discount window helps depository institutions manage their liquidity risks efficiently and avoid actions that have negative consequences for their customers, such as withdrawing credit during times of market stress,” the Federal Reserve and the other two agencies said in a joint statement.

The Fed already said on Sunday that it encouraged depositary institutions to use the emergency lending window and announced they may borrow from it for periods as long as 90 days, pre-payable and renewable by the borrower on a daily basis.

Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci