Noting "continued improvement in financial market conditions," the Federal Reserve Board said Tuesday that it would reduce the maximum maturity of loans through the discount window to 28 days, down from 90 days.

The change takes effect Jan. 14.

Lengthening the maturity of discount window loans was one of the first tools the Fed used to fight the financial crisis.

Until Aug. 17, 2007, the discount window was typically used for overnight loans. The Fed initially gave borrowers 30 days to repay the central bank. As the crisis deepened, the Fed said in March 2008 that discount window loans could be repaid within 90 days.

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