This approach would acknowledge a role for the discount window in stress planning, improve the substitutability of reserves and Treasury securities in firms’ HQLA buffers, and maintain the overall level of HQLA that firms need to hold. Such an approach  9  See the note to table 5 in Board of Governors (2019b, p. 14). See Board of Governors and FDIC (2019).
While if neither increasing spreads nor withholding lending is feasible, the result may be that NPLs grow and accumulate and new actions are required. When it comes to absorbing NPLs, I would like to cite an analogy. When you think the tail of your cat needs a trim, you’d better cut it once and for all.