The discount window at the Federal Reserve is a suitable substitute for deposit insurance and a possible method of preventing bank runs.

Question

Quizplus · Accepted Answer

The discount window is not a substitute for deposit insurance as it is primarily a tool for providing short-term liquidity to banks. While it can help prevent bank runs by providing funding during times of stress, it does not guarantee the safety of depositors' funds like deposit insurance does.

The Discount Window at the Federal Reserve Is a Suitable