Full text of Federal Reserve Bank of New York Circulars : 8908. Elimination of "Ineligible Paper" Discount Rate Differential

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FEDERAL RESERVE BANK
OF NEW YORK

f Circular No. 8908"!

L

August 29, 1980

J

Elimination of “Ineligible Paper”
Discount Rate Differential

To All Depository Institutions
in the Second Federal Reserve District:

In accordance with the provisions of the Monetary Control Act of 1980, the
directors of this Bank, with the approval of the Board of Governors of the Federal
Reserve System, have eliminated the one-half percent ‘'penalty” rate with respect
to advances at the discount window that are secured by “ineligible paper.” The ac­
tion will become effective September 2, 1980.
Under current rules, advances secured by collateral that is eligible for discount
under section 13 of the Federal Reserve Act—principally Government securities or
customers’ notes maturing in fewer than 90 days—are made at the basic discount
rate (now 10%). Advances secured by other collateral (normally longer-term
customers’ notes or municipal securities) have been made, under section 10(b) of
the Federal Reserve Act, at one-half of one percent more than the basic discount rate.
With the elimination of this differential, there will be only one discount rate
for all short-term adjustment credit extended by this Bank, effective September 2.
Enclosed is a copy of our Operating Circular No. 13, “Discount Rates,” re­
flecting this change. Our Operating Circular No. 12, setting forth the general terms
and conditions and procedures applicable to our extensions of credit accommodations
to depository institutions, is also being revised and will be sent to you shortly. Ques­
tions regarding advances and discounts may be directed to Eugene P. Emond, Man­
ager, Credit and Discount Department (Tel. No. 212-791-6146), or Arnold Slansky,
Chief, Discount Division (Tel. No. 212-791-5395).




A nthony

M. S o l o m o n ,
President.

FEDERAL RESERVE BANK
OF N E W YORK

[

Operating: C ircular No. IS
Revised effective September 2, 1980

]

DISCOUNT RATES

To All Deposit dry Institutions
in the Second Federal Reserve District:

1. This Bank has established the following new schedule of rates,
effective September 2. 1980.
Percent
Per Annum

Advances to and discounts fo r dep ository in stitution s:

(a) Advances and discounts under sections 13, 13a, and
10(b) of the Federal Reserve Act, except as
otherwise provided in this schedule.......................

10

(b) Advances for prolonged periods and in significant
amounts under section 10(b) of the Federal Re­
serve Act ....................................................................

11

Advances to in dividuals, p artn e rsh ip s, and corporation s
other than dep ository in stitution s:

Advances under section 13 (13) of the Federal Reserve
Act ..............................................................................

13

2.
This circular supersedes our Operating Circular No. 13, Revised
July 28, 1980.




A

nthony

M.

S olom

on

,

President.