Business Glossary

credit contributed to the banking system by Federal Reserve Banks. This is derived from a variety of sources (1) Reserve Bank discounts and advances at the discount window , secured by bank endorsed business paper (discounts) or credit advances secured by government securities put up as collateral (advances); (2) Treasury and federal agency securities owned by reserve banks through open market operations of the Federal Reserve System; and (3) additional sources of credit, including longer-term extended credit to financial institutions having liquidity problems, and federal reserve float on checks presented to Reserve Banks for collection.

Reserve Banks exert more influence over lending by financial institutions through the actions of the Federal Open Market Committee than the Fed discount window loans.