Access to the discount window of the Federal Reserve is unlikely to deter bank runs because

Question

Quizplus · Accepted Answer

Access to the discount window is designed to provide temporary liquidity to solvent banks, requires banks to demonstrate a need to borrow, necessitates high-quality liquid assets as collateral, and involves potential compensation to the FDIC for losses caused by extending the life of failing banks. These factors collectively indicate that discount window access alone may not be sufficient to prevent bank runs, as it is not designed to support insolvent banks or solve underlying issues leading to a loss of confidence.

Access to the Discount Window of the Federal Reserve Is