Hence, emergency credit should generally be available only to groups of institutions that are tightly regulated and closely supervised to limit the moral hazard of permitting access to the discount window, even when such access is not routinely granted.
Nevertheless, should economic conditions warrant a tightening of monetary policy before this process of unwinding is complete, we have a number of tools that will enable us to raise market interest rates as needed. Perhaps the most important such tool is the authority that the Congress granted the Federal Reserve last fall to pay interest on balances held at the Fed by depository institutions.