The interest rate that banks must pay on money borrowed from regional federal reserve banks is

The interest rate that banks must pay on money borrowed from regional Federal Reserve banks is the Discount Rate

Commercial Banks can take loans from the Federal Reserve Bank but the loans given to the banks are paid back with interest. The interest rate being charged by the Federal Reserve banks on the loans issued to banks is called a discount rate.

Financial institutions or commercial bank accesses this loan through the Federal discount window loan process.

Commercial banks or financial institutions through the discount window loan process can borrow money they need in the short-term. All the 12 regional branches of the fed can provide these loans.

Financial institutions or commercial banks used the loaned capital for the following reasons

These loans are provided for a short term period, typically 24 hours or less. The discount rate is managed by the boards of the Federal Reserve banks with the approval of the boards of governors.

There are three tiers of loans being run by the federal window program and these include

The rate of each of the three tiers are separated but also closely related.

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