Federal Reserve Bank of New York Staff Report No. 1137 (Revised March 2026) Key Findings:
Despite Fed efforts to encourage usage, the DW remains heavily stigmatized. discount window treatment
Olivier Armantier, Marco Cipriani, and Asani Sarkar Federal Reserve Bank of New York Staff Report No
(2024): Explores why banks use the window outside of crises, noting that smaller banks with illiquid portfolios are the most frequent users. simply to avoid appearing financially weak.
(2025): Uses laboratory experiments to show that once a facility is stigmatized, it is extremely difficult to "cure" that perception, even with policy changes.
Banks often choose to pay high premiums (e.g., 13–44 basis points above the DW rate) to borrow from private markets rather than use the Fed, simply to avoid appearing financially weak.