Submitted by Flow5, Dec 31, 2007 18:05

The discount window, before coming a penalty rate in 2003, was an emergency method of short-term funding at a mark-down from the FF inter-bank maket-based interest rate. Previously discount window borrowing was excessive, not shunned. Bernanke has the power (when he decides it's necessary) to reliquefy or prevent bank-credit contraction as a consequence of the CBs depositor's with-drawls.

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