Banks that have some financial difficulty and borrow from the Federal Reserve in what is known as secondary credit will pay an interest rate equal to the federal discount rate.
The federal discount rate is the interest rate that is allocated to money borrowed by banks such as commercial and other institution.
The money is borrowed from the Federal Reserve in central bank as loans.
Therefore, Banks that have some financial difficulty and borrow from the Federal Reserve in what is known as secondary credit will pay an interest rate equal to the federal discount rate.
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