Injection (economics)
From Wikipedia, the free encyclopedia
 |
The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (December 2010) |
When a central bank makes a short term loan to a member institution it is said to be injecting liquidity. In the United States, the Federal Reserve maintains a target federal funds rate for banks to loan money overnight to each other. If the lending banks are unwilling to offer enough credit at this rate, the central bank may step in and make loans itself through the discount window. In this role, the central bank is operating as the lender of last resort and is said to be injecting liquidity.
