Banks Flock to Fed Discount Window Typically Used as Last Resort

The Federal Reserve’s campaign to tighten financial conditions has resulted in notably increased borrowing by US banks at the central bank’s discount window, normally a last-resort funding source.

Balances at the discount window rose to $10.1 billion on Nov. 30, the highest level since June 2020, from $9.1 billion a week earlier. Combined with an increase in US banks’ wholesale borrowings, it suggests that banks are losing deposits to higher-yielding alternatives, according to a report by Moody’s Investors Service.

“Discount window credit is intended to be used by banks to cover short-term funding shortfalls and is not intended to be ...