Banks subsequently borrowed only moderate amounts at the discount window but some institutions placed additional amounts of collateral with the Federal Reserve Banks, suggesting that these institutions perceived the discount window as a potentially significant source of liquidity under some contingencies. Nonetheless, the discount window has two notable limitations as a tool for easing strains in money markets.
In this period of transition, we have to cope with a substantial degree of fragmentation of our securities infrastructure, which adversely affects market liquidity, leads to redundant investments in different systems, and requires additional layers of intermediation. Compared to, say the US, where the infrastructure has been over time highly consolidated, the costs of securities settlement are greater in Europe.