Why might a bank be willing to borrow funds from other banks at a higher rate than the rate at which it can borrow from the fed?

1 answer:

3 0

Because when a bank borrows money from the Fed it has to out toward collateral. Central banks in turn will want extra regulation, depending on the banks rep. As well as banks borrow too frequently from the Fed, resulting in the Fed restricting the ability to borrow in the future.
hope this helps!

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