Former NY Fed chief calls for overhaul of discount window

Dudley’s proposed changes include prepositioning collateral, cutting costs of secondary credit facility

The Federal Reserve Bank of New York

The Federal Reserve’s discount window needs fundamental reforms to bolster its usefulness as a lender of last resort (LoLR) in times of crisis, according to an influential group of financial policy experts.

A report published earlier today (January 9) by the Group of 30 on last year’s bank failures proposes a number of ways to improve the Fed’s LoLR mechanisms, including requiring banks to preposition enough collateral at the discount window to meet all runnable liabilities. 

“In the case of

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