What would happen to the economy if the Fed's discount window completely stopped?

I'm curious what would happen the the US economy (and perhaps others) if the overnight lending capability of the Fed ceased operation for some reason (perhaps a cyber attack) for a non-trivial period of time (a week or more). What are the possible implications of that? Would there be panic, massive loan defaults, lack of operating capital or other nasty things? Also, for the sake of argument, that we didn't know how long the overnight lending capability of the Fed would be down and only speculated at the reason. Would banks just weather the storm for a week or so, or would thing get ugly?

• Well, a massive liquidity crisis isn't an entirely unknown beast ... – 410 gone Jan 5 '15 at 16:38

First, one note on the premise. The Fed basically operates a giant ledger for financial institutions, each of which has a certain balance in its "master account". Over $3 trillion is moved between accounts each day via Fedwire, and these accounts are also used for settling most traditional checks and ACH transactions, which include many of the everyday transactions in the economy. Even alternative payment networks not provided by the Fed, like CHIPS, ultimately use the Fed's ledger to clear net payments. When the Fed loans money to banks via the discount window, it simply adds to their account balance on this ledger; many "cyberattacks" that disabled this capability would probably also disable the ledger itself. This would certainly mean chaos, but the missing discount window wouldn't be the most important aspect of this chaos - the real problem would be the breakdown of the economy's payment system. That said, now suppose that somehow the discount window vanished but the Fed's other services continued. There wouldn't necessarily be any immediate consequences: as of the end of 2014, the Fed was lending very little via its discount window. The H.4.1 "factors affecting reserve balances" release shows that the total of "primary", "secondary", and "seasonal" credit provided to banks was virtually zero relative to the size of the banking system as a whole, at$112 million. This is because the discount rate, currently at 0.75%, is well above other short-term interest rates and has additional strings attached; it only makes sense for banks to borrow from it if they don't have good other options.