The Boston Fed extends credit to depository institutions to promote the smooth functioning of the payment system and help relieve liquidity strains in the banking system. Such credit can take the form of daylight overdrafts, which are governed by the Federal Reserve Board’s Payment System Risk (PSR) policy, or overnight advances through the Discount Window, which can be used to meet temporary or unexpected liquidity needs or, in the case of qualifying smaller institutions, to meet seasonal funding needs. The Boston Fed also monitors reserve accounts of First District depository institutions to ensure compliance with reserve requirements.

Services & Resources

Discount Window

The Discount Window functions as a safety valve in relieving pressures in reserve markets and helps to assure the basic stability of financial markets. It is administered in each Federal Reserve District for the District’s depository institutions.

Payment System Risk

The Federal Reserve Board’s Payment System Risk Policy is intended to assist Reserve Banks and depository institutions in controlling risk.

Reserve Account Management

Federal Reserve Banks monitor reserve accounts to ensure compliance with reserve and clearing balance requirements