rediscount refers to the bill behavior that financial institutions transfer unexpired discounted commercial bills to the People's Bank of China in order to obtain funds. It is a monetary policy tool of the central bank.
Overview:'
rediscount policy is the earliest monetary policy tool owned by the central bank. Modern central banks in many countries regard rediscount as a major monetary policy tool to control credit. rediscount refers to the transfer of unexpired bills obtained by commercial banks or other financial institutions to the central bank.
for the central bank, rediscounting means buying bills held by commercial banks, flowing out real money and expanding the money supply.
for commercial banks, rediscounting is to sell discounted bills to solve the temporary shortage of funds.
the whole rediscount process is actually the process of bill trading and capital transfer between commercial banks and central banks.
The so-called rediscount policy is a financial policy that the central bank intervenes and influences the market interest rate and the supply and demand of the money market by setting or adjusting the rediscount rate, so as to adjust the money supply in the market.
Specific content:
Specify the types of rediscount bills.
A commercial bank can apply for a loan by rediscounting the bills provided by its customers when they borrow money, or applying for a loan with other collateral agreed by the central bank as a guarantee.
government bonds and commercial papers that have passed the examination are usually used as collateral.
if the central bank is publicly listed, it is stipulated that bills in certain industries can be given priority for rediscount. This shows the central bank's financial intention and aims to foster the development of certain industries.
specify the object of rediscount business.
Central banks in different countries have different regulations according to their own conditions.
Many countries allow commercial banks and financial institutions to handle rediscount, but some countries have strict restrictions on the objects of discount.
If the rediscount business of the Federal Reserve System of the United States is limited to member banks, the discount target of the Bank of England is only the first-class securities or bank drafts held by eleven discount firms in the United Kingdom.
determination of rediscount rate. This issue is related to the central bank's monetary policy, so we must act cautiously and the decision-making process is complicated.
In the early days, local central banks decided the rediscount rate by themselves. Later, with the emergence of national financial markets and the formation of unified market interest rates in western countries, it was not feasible to adopt different discount rates in practice.
more importantly, in order to implement the central bank's monetary policy, it is also required that the rediscount rate must be unified.
Therefore, the rediscount rate of all countries is generally determined by the decision-making body of the central bank.
The decision-making body of the central bank must hold regular meetings to study the rediscount rate. The meetings usually analyze the current economic and financial situation, discuss the problems in the implementation of the rediscount rate, and finally decide whether and how to change the rediscount rate by voting.
rediscount business management. The management of rediscount business is an important part of rediscount policy.
for commercial banks, rediscounting is a preferential treatment given by the central bank, which enables commercial banks to cope with the temporary shortage of reserves. However, commercial banks may abuse the discount to arbitrage, such as using the discounted funds to engage in speculation and trading of securities, real estate or commodities.
in order to avoid such things, the central bank must manage the rediscount business, including examining the bank's discount application and understanding the purpose and nature of commercial bank loans.
Legal basis:
Law of the People's Republic of China on the People's Bank of China
Article 22 In order to implement monetary policy, the People's Bank of China may use the following monetary policy tools:
(1) Require financial institutions to deposit reserve funds in a prescribed proportion;
(2) determine the benchmark interest rate of the central bank;
(3) handling rediscount for financial institutions that have opened accounts with the People's Bank of China;
(4) providing loans to commercial banks;
(5) buying and selling treasury bonds and other government bonds and foreign exchange in the open market;
(6) Other monetary policy tools determined by the State Council. The People's Bank of China may prescribe specific conditions and procedures when applying the monetary policy tools listed in the preceding paragraph for the implementation of monetary policy.