The discount rate is another interest rate set by the Fed. This is the rate by which banks can borrow money directly from the Fed [source: Federal Reserve Bank of San Francisco]. The discount rate covers very short-term loans, usually overnight and is higher than the funds rate, because the Fed encourages banks to borrow from each other first. For example, reserve requirements for three types of banks under the Federal Reserve were set at 13 percent, 10 percent, and 7 percent in 1917. Reserve Requirements vs. Capital Requirements Some A chapter10flashcards/ 14/24 3/5/2015 ECON201 Chapter 10 flashcards | Quizlet Reserves 1.2 mill, Loans 6.8 mill, total assets 8 mill; 8 mill deposits, total liabilities 8 mill: First Charter Bank could make additional, first round loans of $400,000 if the required reserve ratio were A) 10%.