Discount policy

from Wikipedia, the free encyclopedia

Under discount policy all measures are a central bank together, the regulation of the money supply in an economy by buying Jump serve. These come from the customer business of the credit institutions that resell ( rediscount ) the bills of exchange to their central bank .

General

The central banks usually have a set of so-called central bank measures at their disposal which they can use against the commercial banks according to economic requirements. These measures serve to control the money supply and are therefore a means of monetary policy of a central bank. This includes the discount policy, which has been used as part of the central bank's measures to manage the money supply.

Instruments of discount policy

The central banks can impose quantitative limits (setting the rediscount quotas) as well as qualitative restrictions (limitation to trading bills and remaining terms of bills of up to three months). A direct means of control is the price at which they grant discount credit , the discount rate . Until December 1998, this was the Bundesbank's key interest rate .

The discount policy comprises the following instruments:

  1. Change in the discount rate: A high discount rate makes rediscounting more expensive for credit institutions, as the purchase of a bill of exchange by the central bank increases the liquidity costs of the commercial banks. It allows you to lend less and less money is created. Lowering the discount rate does the opposite.
  2. Introduction of rediscount quotas: The maximum number of rediscountable bills of exchange is limited according to bank-specific criteria. A reduction in the quotas reduces the creation of money, an increase increases it.
  3. Change in the quality requirements for rediscountable bills of exchange: Stricter requirements reduce the creation of money, less strict requirements increase it.

Germany

Due to the original meaning of the change as a means of credit and payment, the discount policy played the decisive role in the refinancing of credit institutions by the Deutsche Bundesbank for a long time. The banks were able to obtain liquidity at the discount rate by selling bills of exchange eligible for the Bundesbank. The (re-) discount volume reached its peak in 1979/1980 and became the decisive source of central bank money supply . In December 1986 the share of discount credit in borrowing had fallen to 60%. Since January 1987 the discounting of bills of exchange had lost its importance, so that the Lombard policy came to the fore. The share of bill refinancing in total central bank lending was only 29.5% in 1994, compared to 83.5% in 1980. They were replaced by repo transactions . While their share of total refinancing was only 6% in 1980, in 1994 they made up 69.7%.

In Germany, the discount rate was set by the Bundesbank until December 1998. The legal basis was § 15 BBankG a. F., the discount transactions were in Section 19 Paragraph 1 No. 3 BBankG a. F. established. Since January 1999, the Bundesbank has only acted as the executive body of the European Central Bank (ECB) in monetary policy, because the task of monetary policy as a whole has been transferred to the ECB.

The bills of exchange and thus the discount business are no longer relevant in day-to-day banking business, as they are not "machine or computer-capable" due to their document properties and are therefore relatively labor-intensive and costly, as well as their function as a means of credit and payment in the German economy has largely lost.

European Central Bank

With the transfer of responsibility for monetary policy to the European Central Bank , the main refinancing business replaced the earlier discount credit in January 1999. The ECB does not rediscount bills of exchange, but instead provides the commercial banks with other liquidity.

The discount business has lost its attractiveness for credit institutions due to the elimination of the possibility of rediscounting commercial bills of exchange at the Bundesbank. Commercial bills of exchange can only be refinanced as a deposit . For these reasons, there has been no discount policy either at national level or across the EU since January 1999.

Individual evidence

  1. ↑ a b Otmar Issing / Bernd Rudolph, Der Rediskontkredit , 1988, p. 41 f. (PDF; 6.8 MB)
  2. ↑ Werner Ehrlicher / Diethard B. Simmert, Changes in the monetary policy instruments of the Deutsche Bundesbank , 1988, p. 134.
  3. ↑ Monthly Report of the Deutsche Bundesbank November 1998, p. 24