Rediscount
Rediskont (or rediscounting ) is banking resale of a change that a credit institution for its part, within the discount credit has been purchased by customers at a central bank .
General
In Germany, the discount credit is one of the banking transactions according to Section 1 (1) No. 3 of the Banking Act . Banks are therefore legally allowed to buy bills of exchange (and checks) from their customers. Through the purchase of exchange, the bank wrote to her customers to switch amount less the discount rate well and so gave the customer liquidity . Since the bank lost this liquidity, it regained this liquidity by reselling the bills of exchange to the central bank as part of rediscounting.
Germany
Due to the original meaning of the change as a means of credit and payment in the German economy, rediscounting as part of the discount policy played the decisive role in the refinancing of credit institutions for a long time . This started with the Reichsbank , which, after its establishment in March 1875, opened up a further source of refinancing for the credit institutions so that the institutions no longer had to rely on deposits as their sole source. By rediscounting bills of exchange, the Reichsbank had made a source of central bank money available to the institutions, with which they could also create liquidity by monetizing bills of exchange that could be circulated .
The rediscount policy was continued by the successor institute Deutsche Bundesbank . 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 rediscounting of bills of exchange had lost its importance, so that the Lombard policy came to the fore. The share of the discounting of bills of exchange in total central bank loans 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%.
The change and thus the discount and rediscount business is no longer relevant in day-to-day banking business, as it is not "machine or computer-capable" due to its document properties and is therefore relatively labor-intensive and costly, and its function as a means of credit and payment the German economy has largely lost.
Instruments of discount policy
The central banks could stipulate quantitative limits (setting the rediscount quotas) as well as qualitative restrictions (limitation to commercial bills of exchange with a remaining term of a maximum of 3 months, at least 3 parties known to be solvent, payable at a location with a central bank branch). 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 .
Legal bases
In Germany, the discount rate for rediscounting 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 ECB in monetary policy because the task of monetary policy as a whole has been transferred to the ECB.
European Central Bank
With the transfer of responsibility for monetary policy to the ECB, the main refinancing business replaced the previous rediscounting in January 1999. The European Central Bank does not rediscount bills of exchange, but instead provides the commercial banks with other liquidity.
As a result, 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 German Bundesbank and the ECB. Commercial bills of exchange can only be refinanced as a pledge at the Bundesbank. For these reasons, there has been no rediscounting option for bills of exchange either at national level or across the EU since January 1999. This also brought the commercial banks' discount credit to a standstill.
See also
literature
- Otmar Issing Bernd Rudolph : The rediskontkredit. The significance of monetary policy and the influence of the Deutsche Bundesbank's discount credit on the competitive situation in the banking sector . Knapp, Frankfurt / M. 1988, ISBN 3-7819-0404-0 .
Individual evidence
- ↑ Carl Knies, Das Geld - Presentation of the basic doctrines of money , 1873, p. 154 ff.
- ↑ a b Otmar Issing / Bernd Rudolph, Der Rediskontkredit , 1988, p. 41 f. (PDF; 6.8 MB)
- ↑ Werner Ehrlicher / Diethard B. Simmert, Changes in the monetary policy instruments of the Deutsche Bundesbank , 1988, p. 134.
- ↑ these three signatures usually came from the drawee , the issuer of the bill of exchange and the commercial bank when endorsing the bill of exchange to the Bundesbank
- ↑ Monthly Report of the Deutsche Bundesbank November 1998, p. 24
