Editing Federal Reserve (section)

==== Fluctuations ====
Through its [[discount window]] and credit operations, Reserve Banks provide liquidity to banks to meet short-term needs stemming from seasonal fluctuations in deposits or unexpected withdrawals. Longer-term liquidity may also be provided in exceptional circumstances. The rate the Fed charges banks for these loans is called the discount rate (officially the primary credit rate).

By making these loans, the Fed serves as a buffer against unexpected day-to-day fluctuations in reserve demand and supply. This contributes to the effective functioning of the banking system, alleviates pressure in the reserves market and reduces the extent of unexpected movements in the interest rates.<ref name="dfeverydayecon"/> For example, on September 16, 2008, the Federal Reserve Board authorized an $85&nbsp;billion loan to stave off the bankruptcy of international insurance giant [[American International Group]] (AIG).<ref name="Federal Reserve-AIG Press Release-2008-09-16">{{Cite web |date=September 16, 2008 |title=Press Release: Federal Reserve Board, with full support of the Treasury Department, authorizes the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) |url=http://www.federalreserve.gov/newsevents/press/other/20080916a.htm |access-date=August 29, 2011 |publisher=Board of Governors of the Federal Reserve}}; {{Cite news |last1=Andrews |first1=Edmund L. |last2=de la Merced |first2=Michael J. |last3=Walsh |first3=Mary Williams |date=September 16, 2008 |title=Fed's $85 Billion Loan Rescues Insurer |work=The New York Times |url=https://www.nytimes.com/2008/09/17/business/17insure.html |access-date=September 17, 2008}}</ref>