Last Updated:12.01.2025

Institutions are encouraged to prepare to use the Discount Window before the need to borrow arises. Preparation will support the institution if a borrowing need arises unexpectedly and will help the Reserve Bank to quickly provide lending should an imminent situation arise. Institutions can prepare by taking the following steps:

1. Establish discount window access.

   The Discount Window and OC-10 Agreements pages include information on requesting approval to participate in the discount window programs.

2. Set up access to Discount Window Direct (DWD).

   Institutions with discount window access are encouraged to set up DWD access. DWD is a zero-cost application accessed through FedLine® and allows participating institutions to conduct discount window activities online. The DWD Application Setup page includes steps to set up the application.

   Visit the DWD Feature Guide and DWD FAQs to learn more about DWD.

3. Prepare to pledge collateral.

   Institutions should familiarize themselves with the types of assets that are eligible to pledge as discount window collateral and the processes for pledging different types of assets. The Collateral Eligibility page includes information on the assets that are eligible to pledge.

   Securities: The Pledging Collateral page includes information on pledging securities to the Reserve Banks, including how institutions can pledge securities using the Fedwire® Securities Service, Depository Trust Company, Clearstream, and Euroclear.

   Loans: Institutions that intend to pledge loans to the Reserve Banks need to establish a borrower-in-custody (BIC) arrangement which allows the institution to maintain possession of the loans, either on its own premises or on the premises of a third-party custodian. The Pledging Collateral page includes information on pledging loans to the Reserve Banks and BIC arrangements.

4. Pledge collateral.

   Institutions are encouraged to pledge collateral to their local Reserve Bank before a need to borrow arises. Pledging collateral prior to an immediate lending need will help the institution avoid any delay between pledging collateral to the Reserve Bank and receiving borrowing capacity under the discount window programs.

5. Conduct test borrowings.

   Institutions are also encouraged to borrow from the discount window periodically during normal times so they are familiar with the mechanics of borrowing.

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