All Discount Window advances must be secured by collateral acceptable to the Reserve Bank.
What types of assets can I pledge to the Discount Window?
The following types of assets are most commonly pledged to secure discount window advances:
- Obligations of the United States Treasury
- Obligations of U.S. government agencies and government sponsored enterprises
- Obligations of states or political subdivisions of the U.S.
- Collateralized mortgage obligations
- Asset-backed securities
- Corporate bonds
- Money market instruments
- Residential real estate loans
- Commercial, industrial, or agricultural loans
- Commercial real estate loans
- Consumer loans
- Check with your local Reserve Bank if you have questions about other types of collateral
What are the valuation guidelines for my collateral?
The Federal Reserve System Discount Window Collateral Margins Table includes valuation margins for the most commonly pledged asset types. Assets accepted as collateral are assigned a lendable value (market or face value multiplied by the margin) deemed appropriate by the Federal Reserve Bank. The financial condition of an institution may be considered when assigning values.
What type of collateral arrangements do Reserve Banks provide?
Arrangements for pledging collateral should be reviewed with your local Reserve Bank and will vary depending on the type of collateral being pledged. Securities issued by the U.S. government and most securities issued by U.S. government agencies are held in an automated book-entry records system at the Federal Reserve. Other securities pledged as collateral generally are held by a depository or other agent through a custodian arrangement. For qualifying institutions, loans (customer notes) pledged as collateral may also be held on their own premises, under a borrower-in-custody arrangement. Physical securities, promissory notes, and other definitive assets may, however, be held on the Reserve Bank's premises. The Federal Reserve System Guide to Discount Window Collateral contains information on collateral pledge arrangements.
How do I transfer collateral to my Reserve Bank?
For detailed information on procedures for transferring collateral, please refer to Section 4 of The Federal Reserve System Guide to Discount Window Collateral, "Collateral Pledging and Custody".
For an overview of the Federal Reserve's discount window loan collateral program, please refer to The Federal Reserve System Guide to Discount Window Collateral. Discount Window staff at your local Reserve Bank can offer guidance on types of collateral acceptable for pledging or answer other questions on the pledging process.