The amount of reserves fluctuates for a number of reasons, including cash deposits or withdrawals by bank customers. The Fed must constantly monitor and adjust reserves to keep the Fed funds rate on target. That is its only effective means of controlling the demand for credit, and thus the rate of growth of the money supply. This is the facility through which the Fed directly lends to healthy banks that are temporarily short of what they need to meet their reserve requirement. The interest rate on the loan is known as the discount rate .
Banks use it sparingly because of how it reflects on their own management.
This refers to Treasury bills, notes, and bonds sold to the public to cover deficit spending, i.e. spending not covered by tax revenues. The term T-bond is sometimes used generically to refer to all three types of Treasury securities. The Fed occasionally purchases T-bonds outright for its own portfolio to meet the growing need for banking system reserves. This is done as needed to reduce the number and size of repos arising from its open market operations. It pays for its purchases by simply crediting the seller's bank with a new deposit in its account at the Fed.