Definition of Open market discount

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TeachMeFinance.com - explain Open market discount




historic definition...

Open market discount -- This term is generally applied to the open market discount rate in a foreign financial centre. In London the bank rate is the rate of the Bank of England, whereas the open market rate is the rate of other banks and bankers and bill brokers (dealers in commercial and bank paper). In Paris the bank rate is the rate of the Bank of France, in Berlin the bank rate is the rate of the Imperial Bank of Germany, and so on. In New York the bank rate is the uniform rate of the banks as distinguished from the varying rates of other lenders. In London when the Bank of England makes a rate the other lenders adopt it, if possible, or sometimes even quote a higher one ; but if they find they cannot do business at it they make a lower rate, and so it is in Paris, Berlin, etc. In New York if other lenders cannot do business at the rate adopted by the banks they make a lower one.



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Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".


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