Word: rediscount
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...often was he interrupted by catcalls, loud expressions of dissent and ironic cries of "Vive la Banque!" Wide open was the governor to shareholders' jokes, for his report, written a while before, was crammed with cheer, confidence and numerous vows to defend the franc and the low rediscount rate. At the moment the franc was sinking, the Bank of France had just hiked the rediscount rate from 2% to 4% and the state of the franc required Britain's aid in the form of a $250,000,000 loan...
Principal action taken by the Bank of France last week was to boost the rediscount rate from 5% to 6%, the normal central banking method of inducing capi tal to remain in a country. But the flight from the franc continued...
Having cut reserves by one or both of these means, Chairman Eccles could then apply the final brake-upping of the rediscount rate. At present this action would be ineffectual, for banks do not need to borrow from the Reserve. The weakest link in this brake chain is the fact that selling of the Reserve's Government bonds would be flatly contrary to Treasury policy so long as there are huge budget deficits to be financed...
...Eccles bill placed the Federal Reserve Board under the thumb of the President by giving him power to appoint and remove at will the Governor and Vice Governor. To this Administration-controlled Board it gave centralized powers to fix rediscount rates and conduct open-market operations (powers that had previously belonged to the twelve regional Reserve Banks throughout the land); authority to alter reserve requirements, and to admit or deny virtually any collateral for rediscount. As the bill emerged after Senator Glass had worked on it, the Federal Reserve Board (renamed the "Board of Governors of the Federal Reserve System...
...banks must by law maintain, so that it might apply brakes to any runaway credit inflation. The Glass Bill limits the possible upping of reserve requirements to double the present ratios. The Eccles draft would have made any & all bank assets, short-or longterm, liquid or frozen, eligible for rediscount. The Glass Bill provides for special Reserve Bank advances on ineligible paper in emergencies only. And thus throughout Title II Governor Eccles and Senator Glass both achieved their original aims, although delimited and adjusted to banking and political realities...