Credit Risk Management and Account Services

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 pertinent regulations. The Boston Fed also supports First District depository institutions in setting up Federal Reserve financial services.