what is a cost of using fed discount operations to prevent bank panics

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what is a cost of using fed discount operations to prevent bank panics

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Answer 1

Answer #1

Fed uses discount rates so that it can provide funds to financial institutions at low discount rate.This will be used by failing banks to revive their operation.

Hence Bank that should have failed would survive.

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Answer 2

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For what reasons would the Fed prevent a bank from offering higher interest rates on deposits?

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Discuss the issues the Fed faced when trying to increase the level of bank reserves using...

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8. When the Fed provides funds to troubled banks that cannot find any other sources of...

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what is a cost of using fed discount operations to prevent bank panics

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