Mutual Bank is unable to meet the Federal Reserve Board's reserve requirements, so it must take out a loan from the Fed. In this scenario, Mutual Bank is said to have borrowed at the

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In this scenario, Mutual Bank is said to have borrowed at the "discount window,"
and the interest rates charged there are often higher than those charged on loans of comparable risk elsewhere in the economy. The added interest expense, when it exists, serves to discourage banks from borrowing from the Fed. The Fed is the lender of last resort for banks that fail to meet reserve requirements.

Mutual Bank Is Unable to Meet the Federal Reserve Board's