Rediscount is an act that the central bank provides financing support to banking financial institutions with accounts in the People's Bank of China by purchasing discounted but not yet due commercial bills held by banking financial institutions with accounts in the People's Bank of China.
Discount is a commercial term, which means that the payee transfers the unexpired commercial acceptance bill or bank acceptance bill endorsement to the transferee, and the bank deducts the interest from the discount date to the maturity date of the bill according to the par value to pay the remaining amount to the holder (payee). When a commercial bill expires, the transferee shall collect money from the acceptor of the bill according to the bill.
Extended data:
The rediscount rate of the central bank has the following characteristics:
First, it is a short-term interest rate. According to the Interim Measures for the Administration of Acceptance, Discount and Rediscussion of Commercial Bills, the longest period of acceptance, discount and rediscount of bills in China is no more than 6 months; The maximum period of rediscount shall not exceed 4 months. The rediscount rate shall be formulated, announced and adjusted by the People's Bank of China.
Second, this is an official interest rate. It is stipulated according to the national credit policy and reflects the policy intention of the central bank to some extent.
Third, it is the standard interest rate or the lowest interest rate. For example, the Bank of England has many different discount and loan interest rates, and its published recurring discount rate is the minimum standard.
After the bill is discounted, if the commercial bank is short of funds, it can apply to the central bank for rediscounting with the unexpired discounted bill before the bill is discounted. Similarly, rediscount also has discount, and its discount rate is usually called rediscount rate.
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